Upgrading from version 1.2 (or earlier) broke my site, WTF?
The blog, video, and featured categories will be reset when you install Wave 1.3 (or above) after having a previous version installed. As soon as you active it, head to the Theme Settings panel and select the appropriate category for each from the new pull-down menus.
The initial release of version 1.3 had a bug which prevented the featured category from being properly determined on the homepage. Version 1.3.5 was quickly released to patch the issue, and anyone running 1.3 should upgrade.