Marcia - 5:44 pm on Oct 1, 2010 (gmt 0)
Here's an outstanding post by martinibuster, and a good discussion to follow:
You can apply anchor text principles to internal linking, and put relevant, important links to lower level products and subcategories within the body text of content on the related upper category level pages.
Products (often long tail keywords) can generally rank more easily than categories because the search keyphrases are almost always far less competitive.
>What sort of advice should I be giving them regarding the content
Unique content on important pages (not data-driven) with in-text linking and some specifically targeted links to closely related pages - not necessarily part of global navigation.