If you are not using the Categories module, and use the "Show Categories" choice under general setup, it only shows main categories, not sub-categories. (Just an FYI... I'm not using it this way, but I stumbled upon it.)
The show categories under general settings is the old way the cart displayed categories before the category module was released. We were going to remove it but there were a few customers that still used it and wanted it so we left it in. It doesnt display sub categories. If you want to display the nested subcategories please use the categories module.
-Scott
OK, cool. Like I said, it was just an FYI, and something that folks should be aware of if they are using Sub-Categories.