Categories are useless:
There is no way to add/delete/rename them, just hide them, which says a lot on their true utility...
Once an item has been associated with a category there is no way to remove it from all categories: you have no choice but to remove the item itself or move it to another category.
Folders are painful to use beyond a couple of items:
There is no way to MOVE an item between folders with drag and drop: Drag & drop will COPY it and then you will need to REMOVE the old one yourself...
The drag & drop shift/control/alt modifiers are not even following the basic GUI semantics.
After an import everything is put inside an "import" category. Ok but when you move them into folders for organizing them, they stay in that category forever (or in another category, see point #2).
Good luck to remember which items have already been organized after importing a couple hundred of them...
Categories / folders are two badly designed concepts that overlap. Just keep the folders and make them working like true folders one can find in all other applications.