Some people aren't very comfortable with seeing other people's PDAs. He may not care if it's people he doesn't know, but around his friends, maybe he thinks it will make them uncomfortable.
I mean, haven't you ever been around a friend and her boyfriend who won't stop being touchy-feely? Doesn't that make you a little uncomfortable, especially if your boyfriend isn't there? I'm not saying you guys would start full-on making out, but even a little kissing and cuddling isn't always appropriate around other people.
You might also consider that not being overtly affectionate makes you more part of the group, rather than his tag-along girlfriend.