WP Categories and Posts now has a new page and author. Please visit the new WP Categories and Posts Page on the Phill McDonnell website.
WP Categories and Posts is an extension of the core WordPress function called wp_list_categories. This plugin adds in a template tag you can use to display categories and sub categories and the posts underneath those categories.
For working examples, please see the following pages:
Here is a screenshot as well.

Download
Please download the file WP Categories and Posts v1.0.
Installation
Installation is simple. Just unzip into your plugins folder and activate the plugin. From there, you may call the function ronalfy_list_categories_and_posts() from within your WordPress page.
An example page template called sitemap.php is included in the zip file. You can copy this file into your themes directory and use it as a page template for your sitemap if you wish.
Usage
The function by itself will return the categories and posts. It will accept most of the same arguments as wp_list_categories, but not all of them. One argument that I noticed that didn’t work was showcount.
Support
This plugin is provided as is, but I will try to answer most of your questions in the comments. Thank you.