Enter Layout Mode.
If it's not already up click i or double click a field to bring up the inspector.
Click the category field if it's not already selected.
In the inspector, on the data tab, you find that this field field is set up as a drop down list that draws values from the "category list" value list.
Click the pencil icon to the right of the value list name.
This brings up the Manage | Value Lists dialog where you can change the values in the value list.