Paula,
There is no easy way to do this as most of my products have many sub-categories, but just make sure you make changes under the "newest" dropdown and if you have a lot of products do the biggest groups first I suppose. There are 3 categories now and you can bulk edit in the account area of your store to group them correctly. (BTW, Zazzle has said that the "recipient" category can be left blank).
It is very discouraging to have to spend so much time doing this and my sales have plummeted, like many others.
I have been trying to update my best selling items in my most popular stores first and then making sure each folder - or group of products - has at least one good category. For instance, in my BlueHyd store, I have made sure all products are in the "hydrangea flower" category. Now there are three to add to each product and I'll go in (for the next hundred years) and edit for the other "recipient" and "events and occasions" sections.
I am staying away from the tagging changes for now as there is talk of them getting all messed up if changes are made, although Zazzle now offers us the option of adding tags to the beginning, end, etc. when bulk editing.
Sorry I can't really be of more help, just wanted to give you guys a heads up.