I set up my group blog the red kitchen to have categories and it is GREAT! Perfect for this group.
If you look on the sidebar, it has a list of all of the categories that posts have been made under. I also have red boxes under each actual post that lists the category so that people can find it again later or just know what the cook thinks it should be.
I haven't used categories nearly as much on my personal journal, but the kitchen makes up for it many times over! I really love how it works.
hope this helps!
Kristine