Menu 3.0 dropdowns for child categories

In the new 3.0 menu system, is there any way to add a parent category to the menu and have child categories automatically listed beneath it as a dropdown? Right now I can do it manually, but every time I posted in a new category I would have to update my menu — it would be much easier to do this automatically.

I’ve seen pre-3.0 themes use this functionality for menus — is it possible with the new menu system?