The plugin partially works for me on 3.2.1
I have the subdomains configured and am able to view only the posts within the proper category. i.e. cooking.mydomain only brings up the posts in the cooking subdomain
However, I am unable to set up individual themes for the subdomains. The option is selected under the settings. It says to edit the category to change the theme. When I select on one of the category names, I’m given a 404 error.