How to block a contact in Gmail?

1. Click Contacts from the left side of Gmail.
2. Select the person you'd like to block.
3. Select Block from "Show in chat list" Box.

To unblock 
Just select Always or Auto from the "Show in chat list" Box.
OR
Type their name in the Search, add, or invite field at the top of your Chat list. Then, in the blue box that appears, hover over your contact's name and select Show in chat list.