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How much is your Page Rank (PR) in Google? Did that go down too? Did you recently made some changes to your site that could have caused your PR to go down?
Or is it possible that some of the sites that could have been linking to you are not anymore?
This seems like a lot of questions but some could be part of the answers to why you site dropped rankings in Yahoo!
However remember that the Google update just started only hours ago and, like most other past updates, it is normal to see PR's fluctuate up or down to finally stabalize once it's all over.
I hope that helped
They usually don't respond to requests to change a category.
If you are now buried, it's not likely you'll get a lot of traffic. So you could try to get it changed - worse comes to worst, they drop you and you still don't get traffic. Or you could just leave it there and try to get the couple of visitors that may go your way. It's your call.
I would try to change it, just for the sake of the extra traffic. Most Yahoo directory listings are useless anyways.