Noburg,
It's been a while since I converted to v8, but if memory serves, what happens is that all your categories become playlists. There will be a playlist group called "Organization" and another called "Mixes" (playlist groups are just like category groups) and all your 'categories' will be playlists, some of them in each of these playlist groups. I could be wrong about the details, but I'm fairly sure that all your categories are preserved, ie turned into playlists. What I'm not sure of is if your current playlists are preserved. They weren't way back when I first got v8. They probably are now.
Your best bet is to backup your current library, try v8, and take a look. Note, however, that v8 uses a new kind of database, so if you want to revert to v7, then you should restore the backup of the v7 database.