It doesn't read to me like categories are being abolished -- just that they're going to be handled in the database in a different way:
The term_taxonomy table places a term within a taxonomy. This is what makes a term a category or tag (or both). “term_id” is the ID of a term in the terms table. “taxonomy” designates the taxonomy in which the term resides. The default taxonomies are “category”, “link_category”, and “post_tag”.
The php is beyond me, but it seems to be saying that there will be "terms" that can either function as categories or as tags. So it sounds like you'll be able to keep your categories. Perhaps someone who actually understands all this could clarify.