I recently wrote a plugin to add the “nofollow” rel attribute to archive links in WordPress. I had a request to write a plugin that does the same thing for categories in WordPress, so I created one. This plugin allows you to display category links in your theme without giving them any pagerank value.
The Nofollow Categories page is here, and you can download the plugin here. I don’t recommend using them both at the same time. My recommendation is to use one or the other. You want to give pagerank to one or the other, but not both.