Hi all. i have wp 2.3.1 and i would remove category/ prefix from permalink. I have installed "top level category" plugin and this is a partial solution. If i enter inside a categories i have error 404 if i click on previous or next page. This problem can be fixed with /?paged=4 instead of /page/4/. The page that i believe must edit are wp-includes/template-functions-post.php and wp-includes/link-template.php.
sorry for bad english,