Same here – it broke my permalinks when I tried clicking on a post, and led me to the 404 error page.
I use the Top Level Categories plug-in on all of the WordPress websites I design, so this is really frustrating me. I wish WordPress would test their upgrades out for compatibility with the most popular plugins before they go releasing these updates.
Everybody using Top Level Categories plugin and who has updated to WordPress 3.1 knows, that Top Level Categories breaks WordPress 3.1. Since TLC hasn’t been updated in 3 years and sites are down, we decided to do something about it.