Implementing the SQL structured Nested Set gem, allowing for infinite nesting. This allows for drag and dropable lists.

categories_controller.rb

class CategoriesController < ApplicationController
  before_filter :add_breadcrumbs
  before_filter :authorize, only: [:new, :create, :new_subcategory, :update, :edit]
  def new
    add_breadcrumb "New Category", new_category_path
    @category = params[:id] ? Category.find(params[:id]).children.new : Category.new
    @count = Category.count
  end

  def new_subcategory
    add_breadcrumb "New Subcategory", new_subcategory_categories_path
    @category = params[:id] ? Category.find(params[:id]).children.new : Category.new
  end

  def create
    @category = params[:id] ? Category.find(params[:id]).children.new(params[:category]) : Category.new(params[:category])
    if @category.save
      redirect_to products_path, :notice => "Category created! Woo Hoo!"
    else
      render "new"
    end
  end

  def edit
    @category = Category.find(params[:id]) 
  end

  def edit_subcategory
    @category = Category.find(params[:id]) 
  end

  def destroy
    @category = Category.find(params[:id])
    @category.destroy
    flash[:notice] = "Category has been obliterated!"
    redirect_to products_path
  end

  def update
    @category = Category.find(params[:id])
    if @category.update_attributes(params[:category])
      flash[:notice] = "Changed it for ya!"
      redirect_to products_path
    else 
      flash[:alert] = "Category has not been updated."
      render :action => "edit"
    end
  end
  def sort
    params[:category].each_with_index do |id, index|
      Category.update_all({position: index+1}, {id: id})
    end
  end

  def add_breadcrumbs
    add_breadcrumb "Admin", admin_sites_path
    add_breadcrumb "Manage Products", products_path
  end
end

category.rb

class Category < ActiveRecord::Base
  acts_as_nested_set
  acts_as_list :scope => :parent_id
  attr_accessible :name, :parent_id, :position, :image
  has_many :products

  mount_uploader :image, CategoryUploader

	scope :position, order("position asc")
	scope :categories, where("depth IS NULL")
	scope :subcategories, where("parent_id IS NOT NULL")
	scope :with_depth_below, lambda { |level|
  	  where(self.arel_table[:depth].lt(level))
	}
  
end

productsindex.html.erb

<nav id="admin">
<ul>
  <li><%= link_to "New Category", new_category_path %></li>
  <li><%= link_to "New Subcategory", new_subcategory_categories_path %></li>
  <li><%= link_to "New product", new_product_path %></li>
</ul>
</nav>

<h3>Categories</h3>
<div id="category">
<ul id="sortable">
  <% for cat in Category.roots %>
    <li id='category_<%= cat.id %>'>
    <span><%= cat.name %></span>
    <span>Depth: <%= cat.depth %>
     
      <%= link_to raw('<span class="button-edit">Edit</span>'), edit_category_path(cat) %>
      <%= link_to raw('<span class="button-delete">Delete</span>'), cat, :method => :delete, :confirm => "Are you sure you want to delete this category?" %><br /> <br />
      <%= render 'shared/children', :item => cat unless cat.leaf? %>
    </li>
       <hr>
  <% end %>
  <!-- end category -->
  <h3><a href='#' id='serialize'>Save Order</a> | <a href="javascript:location.reload(true)">Reset</a></h3>
</ul>
  </div>

routes.rb

Jensenlocksmithing::Application.routes.draw do
  scope ":locale", locale: /#{I18n.available_locales.join("|")}/ do
    get "log_out" => "sessions#destroy", as: "log_out"
    get "log_in" => "sessions#new", as: "log_in"

    resources :sites, except: [:new, :show, :destroy, :create] do
      collection do
        get :home
        get :about_us
        get :faq
        get :discounts
        get :services
        get :contact_us
        get :admin
        get :posts
      end
    end

    resources :logos
    resources :users
    resources :abouts
    resources :sessions
    resources :coupons
    resources :monthly_posts
    resources :reviews, except: [:new, :show, :destroy, :create]
    resources :contacts, except: [:new, :show, :destroy, :create, :index]

    resources :categories, except: [:index, :show] do
      collection do
        post :sort 
        get :new_subcategory
        get :edit_subcategory
      end
      resources :children, :controller => :categories, :only => [:index, :new, :create, :new_subcategory]
    end
    resources :products do
      member do
        put :move_up
        put :move_down
      end 
    end
    resources :faqs do
      collection { post :sort }
    end 

    root :to => 'sites#home' # handles /en/
    match "/savesort" => 'sites#savesort'
    match "*path", to: "sites#not_found" # handles /en/fake/path/whatever
  end


  root to: redirect("/#{I18n.default_locale}") # handles /
  match 'request_bid' => 'request_bid#new', :as => 'request_bid', :via => :get
  match 'request_bid' => 'request_bid#create', :as => 'request_bid', :via => :post
  match '*path', to: redirect("/#{I18n.default_locale}/%{path}")
 
  
end

sharedchildren.html.erb

<ul>
  <% item.children.each do |child| %>
    <li id='category_<%=child.id %>'>
      <span><%= child.name %> Depth: <%= child.depth %><%= link_to 'Edit', edit_category_path(child) %>
        <%= link_to 'Delete', child, :method => :delete, :confirm => "Are you sure you want to delete this Subcategory?" %> </span>
      
      <% child.products.position.each do |product| %>
      	<br /><%= link_to "UP", move_up_product_path(product.id), method: :put %> | 
        <%= link_to "Down", move_down_product_path(product), method: :put %> ----------<%= product.position %> 
       <%= product.name %>
       <%= image_tag product.image_url if product.image? %>
        <%= link_to 'Edit', edit_product_path(product) %>
        <%= link_to 'Delete', product, :method => :delete, :confirm => "Are you sure you want to delete this product?" %> <br />
      
        <% end %> 
      <%= render 'shared/children', :item => child unless child.leaf? %>
    </li>
  <% end %> <br />
</ul>