I guess the title of this post says it all :)
I've been using Microsoft Word 2007's native WordPress support to publish articles to my blog, but with a post just before - first one since the update to WordPress 2.7 - the "Insert Category" button went off to WordPress as usual, fetched the category list for my blog, and brought up a drop-down that contained only the category *descriptions*, not the categories themselves.
It's no show-stopper, but given that this problem cropped up I ended up switching to Windows Live Writer to publish, which worked fine (though for some reason the images it sent to my media library show up fine in the actual blog but just as text links in the dashboard!) but I prefer Word as WLR doesn't support fluid-width WYSIWYG.