How to show category children

I’m using WP 2.1.1 with the theme 3ColumnK2-0.9.5.1.

Problem: My category list is not showing the children.

As far as I can see the list of categories is generated by this code:
if (function_exists(‘wp_list_categories’)) {
wp_list_categories(‘title_li=&show_count=1&hierarchical=1’);
} else {
list_cats(0, ”, ‘name’, ‘asc’, ”, 1, 0, 1, 1, 1, 1, 0,”,”,”,”,”);
}

I want my category children to show up – please help me to make this happen.
Thanks!