I just noticed what I believe is a flaw in Q2006 Basic and presumably higher versions.
If you have an existing transaction without a category and you try to make it into a transfer, you may run into a problem. If you go into the Category box and scroll all the way down to where your accounts are listed in "Transfer to/from" form, then you won't have a problem.
HOWEVER, when you click on that down arrow in the Category box you're also presented with several buttons: Split, Transfer, Add Cat, Show List and Show Hidden. If you click on that Transfer button, you're presented with a form that not only asks you to find the account you're transfering to, but also to put in an amount. If you do that, you'll wind up creating a NEW transaction.
Has this been mentioned before? This has to be an error. If it's a "feature," it's a totally non-intuitive one. Why would you want to create a new transaction from inside another one?