Setting up categories in Drupal is relatively easy. Set up your vocabulary (or category name) and add the terms. What happens when you are not sure what the terms are going to be? Wouldn't it be nice if you could add the term names on the fly? You can with Free Tagging enabled.
You need to enable it in the category management section of your Drupal site. Click on the category name you want to enable free tagging, and there is a check box for free tagging. Check it and you are good to go.