The new to WordPress 3.0 Menu’s can be made into a hierarchal structure by dragging the menu items to the left or right. I found a user guide on the WordPress Codex that you may find helpful.
The WordPress menu editor allows you
to create multi-level menus using a
simple ‘drag and drop’ interface. You
can drag menu items up or down to
change their order of appearance in
the menu, or you can drag them left or
right in order to create a multi-level
menu structure. To make one menu item
a subordinate of another item, then
position it underneath, and drag it
slightly to the right of, the main
menu item.
There are some helpful screen shots in the guide to help you along your way.
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