To delete a category you created in error, first login to your Blog Control Panel and click on the Article & Photo Manager tab.

You will see a link at the top right called Category Settings; click that Category Settings link.

The Category tree will be presented on the left side of the page. Click the Category you wish to delete.

You will be presented with the Category Properties page. Click the Delete button - a popup window will ask if you are sure. Click OK and the category will be removed.