display category on index page

using wordpress theme Themematic with Gallery by chris wallace

by default the theme displays most recent posts. however i would like it to display categories and the posts that belong to those categories. For example: Click Here thats a little diagram i drew out.

I’ve been trying but not sure if its possible. if not possible is there at least a way to display at least one category? I found this forum topic from wordpress and someone who did it but my code is very different from this person’s.

index.php file from themematic theme:

<?php
global $options;
foreach ($options as $value) {
    if (get_option( $value['id'] ) === FALSE) { $$value['id'] = $value['std']; }
    else { $$value['id'] = get_option( $value['id'] ); }
    }
?>
<?php get_header() ?>
	<div id="container">
		<div id="content">
			<?php thematic_navigation_above();?>
<?php get_sidebar('index-top') ?>
<?php thematic_above_indexloop() ?>
<?php thematic_indexloop() ?>
<?php thematic_below_indexloop() ?>
<?php get_sidebar('index-bottom') ?>
			<?php thematic_navigation_below();?>
		</div><!-- #content -->
	</div><!-- #container -->
<?php thematic_sidebar() ?>
</div>
<?php get_footer() ?>

and this is from gallery theme’s function.php where it creates the content for the index page/posts:

// Creating the content for the INDEX
function remove_index_loop() {
  remove_action('thematic_indexloop', 'thematic_index_loop');
}
add_action('init', 'remove_index_loop');

function gallery_index_loop() {
  global $post;
  /* Count the number of posts so we can insert a widgetized area */ $count = 1;
  while ( have_posts() ) : the_post() ?>

			<div id="post-<?php the_ID() ?>" class="<?php
			thematic_post_class();
			if(function_exists('p75GetVideo')){
		    if(p75GetVideo($post->ID)){
				  echo " video";
				}
			}
			?>" style="width:670px;">
				<div class="entry-content">
					<?php childtheme_post_header() ?>
                    <a href="<?php echo the_permalink() ?>">
                    <span class="slide-title">
<?php echo get_post_meta($post->ID, 'designed-by', $single = true); ?>
                    <div style="width:145px; position:inherit; top:0px;" align="right">
<?php echo the_title(); ?>
</div></span>
                    <img class="full-image" src="
<?php if(get_post_meta($post->ID, 'full-image', $single = true)){echo get_post_meta($post->ID, 'full-image', $single = true);}
else{bloginfo('url');
echo "/wp-content/themes/gallery/images/thumbnail-default.jpg";} ?>"
width="150" height="113" alt="<?php echo the_title() ?>" /></a>
				</div>
			</div><!-- .post -->

    <?php comments_template();

    if ($count==$thm_insert_position) {
      get_sidebar('index-insert');
    }
    $count = $count + 1;
  endwhile;
}
add_action('thematic_indexloop', 'gallery_index_loop');

i know its a lot to ask for. but if anyone can help in anyway that would be truly wonderful. Thank you and godbless.