Categories are very powerful and will do a fine job of separating posts. People do it all the time. Whether a theme shows the full post, an excerpt, or just the title on categories pages was the theme designer's choice. It is theme specific. This blog post by Panos lists which themes here show excerpts, full posts or just titles in categories, tags and archives pages: http://wpbtips.wordpress.com/2009/03/25/full-posts-in-archive-pages/ .
There is also a trick that can be used to have links to the categories pages in the top navigation, but again, it is theme specific. Some themes will do it and some will not. Do note thought that if you are using a theme without top navigation, this trick will work in the pages widget for ALL themes.
They are not available with .ORG. You have to use the same methods I've mentioned above unless you have a very thorough understanding of PHP script. There are a few plugins out there, but in my testing they can be quite finicky. Most basically just automate the process of using categories to simulate multiple blogs.
Even Joomla, a high-powered CMS package uses sections and categories to list posts separately.