There is a bug in MVC3 related to unobtrusive validation on dropdownlist. Please reference to this http://aspnet.codeplex.com/workitem/7629[^] link for more detail explaination.
Briefly, you can't use the same name for category collection and category field, so just change your collection name and update following line in your view
@Html.DropDownListFor(model => model.CategoryID, new SelectList((System.Collections.IEnumerable)ViewData["Categories"], "Value", "Text"))
Thanks again Henry He
Original linkASP.NET MVC3 Validation Basic