The posts_nav_link doesn't work in categories, when trying to browse to the second page of a category using "Previous entries", then the link points to:
http://example.com/index.php/page/2/
Instead of pointing to:
http://example.com/index.php/category/page/2/
The fix for me was to modify get_pagenum_link located in template-functions-links.php (Both trunk and branch should get this rather easy fix)
function get_pagenum_link($pagenum = 1) {
global $wp_rewrite;
// IIS on Windows fix
if (!$_SERVER['REQUEST_URI']) $_SERVER['REQUEST_URI'] = $_SERVER['SCRIPT_NAME'].$_SERVER['PATH_INFO'];
$qstr = wp_specialchars($_SERVER['REQUEST_URI']);
...