Drop Down Nav – Add Categories

I’m trying to add categoris to my current dropdown menu which currently only displays pages. I would like to remove the pages and just have catagories in this area of navigation.

I added:
<?php wp_list_categories('title_li='); ?>
Which displayed the catagories but in a not so clean fashion. How do

I incorporate this code to add the catagories into the header code below? Also how do I remove the pages?

<div id="navigation">
<?php wp_nav_menu( array('menu' => 'categorynav' , 'container' => '' , 'container_class' => 'false', 'menu_id' => 'catnav', 'menu_class' => 'dropdown dropdown-horizontal', 'echo' => true )); ?>

Thank you for your help!

Jason