Nope. A campaign has different settings (budget, targeting etc.) than an ad group so I don't think it's possible. ps - maybe this could be done in the adwords editor? I don't use it much so I don't know. I assume no, but maybe a more experieced AdWords Editor user could verify?
I'm not quite sure what you meant by the way you worded it, but if you want to move campaigns and ad groups around, you can do that in the AdWords Editor. http://services.google.com/adwordseditor/ An update just came out today (or yesterday :S) which adds some much needed functionality like Dupe Detection and Keyword Grouping.
Will editor let you move an entire campaign into another campaign and automatically convert it to an ad group? That was my understanding of the question.
I wasn't quite sure what he meant by convert it to an ad group unless if he meant "take every keyword, ad and ad group in this campaign and put it into 1 ad group". In which case he can just create a new ad group in the editor and just Cut and Paste everything into that new ad group fairly quickly.
I have to get off my ass and get more familiar with the editor. That will get rid of my "can't connect to the internet so I can't work today excuse though... "
That's easy, just tell them you've made extensive changes that don't line up with your current account snapshot on your HDD I would've torn all my hair out by now if it weren't for the editor though, I highly recommend you use it.