I've just begun using WP 2.3.1 and ran across a problem that was addressed by ticket #2395. However, it has a minor typo on line 669 that causes a "$link" string to be output instead of the actual category listing.
The line currently reads:
$output .= "\t" . '<li class="' . $css_class . '">$link' . "\n";
It should read:
$output .= "\t" . '<li class="' . $css_class . '">' . $link . "\n";
I hope some of the WP developers will notice my post and make the needed correction.