Displaying all categories and posts of a certain custom post type

This should do it

List all posts sorted by tag name or category name or taxonomy custom taxonomy
Within each category posts sorted ascending by post title.

<?php
//get all terms (e.g. categories or post tags), then display all posts in each term
$taxonomy = 'category';//  e.g. post_tag, category
$param_type = 'category__in'; //  e.g. tag__in, category__in
$term_args=array(
  'include' => '1,2,3',
  'orderby' => 'name',
  'order' => 'ASC',
  'child_of' => 3
);
$terms = get_terms($taxonomy,$term_args);
if ($terms) {
  foreach( $terms as $term ) {
    $args=array(
      "$param_type" => array($term->term_id),
      'order' => 'ASC',
      'orderby' => 'title',
      'post_type' => 'portfolio',
      'post_status' => 'publish',
      'posts_per_page' => -1,
      'caller_get_posts'=> 1
      );
    $my_query = null;
    $my_query = new WP_Query($args);
    if( $my_query->have_posts() ) {
      echo 'List of Posts in '.$taxonomy .' '.$term->name;
      while ($my_query->have_posts()) : $my_query->the_post(); ?>
        <p><a href="<?php the_permalink() ?>" rel="bookmark" title="Permanent Link to <?php the_title_attribute(); ?>"><?php the_title(); ?></a></p>
       <?php
      endwhile;
    }
  }
}
wp_reset_query();  // Restore global post data stomped by the_post().
?>