@ornamentgirl, I agree this does appear stupid, but I’m sure there’s method in the madness. Just delete the category via the database as per my earlier post, nothing has been destroyed, there are plenty of easy fixes.
One option which is less easy if you have a lot of products but can be done via the CMS, is to rename the uncategorised category and move products from a ‘real category’ to it, as the replacement for the real category.
In future, stage updates in a development installation. WordPress only installs minor builds automatically for good reason.