Update 2 : the patch is not needed anymore as there is a new version of category icons (2.1) that is compatible with WordPress 2.8+. Download it to resolve the issue.
Update 1 : here is the detailed procedure (thanks to ycs for the tip) :
- deactivate the plugin,
- log out of the admin control panel,
- replace the old category_icons-panel.js in the js folder by this one,
- clear your browser cache,
- close all open browser windows,
- open a browser, log in and reactivate the plugin.
Please leave me a comment if it’s not working.