Categories isn't functioning properly

Problem
I am currently using the berylliumous theme that has an imaging sliding function that’s connect to themes. I noticed one day after posting and reviewing my post, that the feature sliding function disappeared. So I went to check my admin panel, and instead of having the categories show up under “All Categories” (under new post/edit post), they only show up under “Most Used”.

When I attempt to edit this, the change doesn’t stay? As in, even after I check the categories I want it to show up in, it doesn’t. I can’t even change them in “quick edit”.

Under my “Categories” section under “posts” in my admin panel, all my original categories are gone. The funny thing is, I can’t even recreate the “missing categories” because WP still says they exist.

ex: A term with the name provided already exists with this parent.

Information
1. WP Version: 3.0.3
2. Theme: Berylliumous
3. Hosting: Fatcow
4. Windows 7
5. Browser: Opera
6. Domain*: http://blog.kan-d.net/
*doesn’t work?: try http://clearcontactscom.fatcow.com/blog/

Personal Thoughts
I have a gut feeling it’s because I updated wordpress… but I’m not sure how to return to an old version without having to re-install & re-post everything again.

Any help would be greatly appreciated!