Web 2.0 is here

Step 1: Select CATEGORY MANAGER from the Content Menu

Step 2: Click on the check box next to the current CATEGORY title and then click DELETE

IMPORTANT NOTE:
The system will allow you to delete CATEGORIES associated with a SECTION.  However, SECTIONS can not be deleted until all CATEGORIES have been deleted.  So if you want to delete an entire SECTION of your site, you must delete all associated CATEGORIES first.