I don't have a problem with the cats or layout looks OK to me, but their again I'm just starting to develop a similar size blog right now so have that idea in my mind
The things that does jump out is your lack of any
SEO so for starters install the Platinum
SEO plug in then rename your structure to a more SE friendly name rather than the current default page names - Also work on your page titles & desriptions
The content within your postings is poor I looked at a couple and some had next to no text at all and its the text that will gain your rankings - you also have comments open which will lead to a mass of spam so I would close comments as the only people that will write comments are the ones saying " click this great site out"
The black label ads you are using all open in the same window so anyonew click on those will send traffic away from the site so change that to new window
But its the content and
SEO plugin you need to sort otherwise it wil never get traffic