Version 2.1 of Daniel’s DropDowns has been released. This fixes a problem introduced with the 2.5-series of WordPress - the output of the WordPress tag changed, so the search-and-replace portion that added a “Select Category” entry didn’t work. This has been fixed in version 2.1. I also corrected a small bug that caused the first entry in the category list to be selected if a default wasn’t specified.
It can be downloaded from the WordPress Plug-In Directory. Enjoy!
(UPDATE: This plug-in is inactive, as its functionality is now part of WordPress core.)