Thank you, Michael!
I was going to write up a comment to explain the procedure in order to help the others on the board here, but you've already pointed to the db_version listing.
People, this can be done by backing up your database in order to perform a little surgery on the active database by accessing phpAdmin on your hosting server. Turn off your plugins in WP in preparation to do a forced upgrade.
In a separate browser tab or window, go to your hosting's phpAdmin, locate wp_options in the left column (and if you have wp_categories in the listing, that's proof you need to do this; that table should be replaced by a few new tables). Choose Browse, locate db_version in the "option_name" column. If you see the value as 6124, you need to edit it using the edit icon to the left. Change the number to match the db_version number from your previous version (see Michael's link directly above) and save your change.
Now, go back to the tab/window of your WP site and after the main URL of your blog add "/wp-admin/upgrade.php" and you'll be presented with an upgrade window. WordPress is saying, "hey, your database is not a 2.3.2 version, we need to upgrade". WP sees the old number in the database and goes into upgrade mode. Click to upgrade and this should change your categories to the new terms, tags, etc. that 2.3.2 needs to access.
If successful, then activate your plugins again and breathe a sigh of relief. Your categories are back!
That's how we did it.