I spent about two hours looking for how to hide child categories and I didn't see anything in the Codex, so I thought I would post another thread for others to find.
If you want to hide the child categories, just use the following function in place of your current list_cats() function.
<?php wp_list_cats('children=0'); ?>
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I'll try to add something to the WordPress codex. If anyone else could add something more on this to the wordpress codex I'd be greatful!