Greetings WP Community,
I recently upgraded a site from 2.0 to 2.3.1. They use Web Space Works excellent Fold Category List plugin. Unfortunately it doesn't look a 2.3.1 version exists yet so I made the necessary changes to get it to work. It's numbered as version 1.2 (unofficially). Hope this is useful for folks. It should work for 2.3 as well. It's not been extensively tested - any comments or problems welcome.
You can download it here:
Fold Category Lists for 2.3.1
This work was done under contract for Splunk in San Francisco.