I did a little more research and found this information:
"In Joomla 1.6, sections are gone. Now the only thing we have is categories. The greatest thing about this is that you can nest the categories. This means you can create a hierarchy of categories. Each category can have one parent category, but one category may have unlimited child categories.
There is no limit to the number of levels in the hierarchy. I doubt that anyone would need to have more than three or four levels, though. Adding more levels might also have some negative impact on your search engine visibility."
http://community.joomla.org/blogs/commun...1237-categories.html
The New Article menu will also have a new listing called "List All Categories" in addition to the standard "Category Blog," and "Category List."
It would make sense if during the transition from 1.5 to 1.6, Joomla! automatically changed each current Section into a Category and the current Categories that were in that Section were nested automatically beneath the new Category. I hope it'll work that way!