Note that you can assign multiple category groups to a single ‘weblog’, so if you use one set for navigation, you can still have another set for other purposes. The categories tag is the native tag for handling category display and creation of navigation links- note the category_group parameter- it allows you to display a specific ‘group’ of categories, thus if you have more than one cat group assigned to the weblog, you can show just the group(s) you want in your navigation.
As to the plugins- just depends on what you want to do which ones you might investigate. I’d start with the native tag, see how it lacks with regard to what you want to do. Then maybe post to ‘How to’ if you need it to do something specific and it doesn’t.
Make sense?