Сделал так:
$categories=mysql_query("SELECT * FROM `cat` ORDER BY `order`");
//mysql_query("SELECT * FROM `posts` ORDER BY `time` DESC LIMIT 3");
while($row=mysql_fetch_assoc($categories)){
echo '<div class="title"><a href="cat/index.php?id='.$row['id'].'">'.$row['name'].'</a></div>';
$posts=mysql_query("SELECT * FROM `posts` WHERE `catid` = '$row[id]' ORDER BY `time` DESC LIMIT 3");
while($post=mysql_fetch_assoc($posts)){
echo '<div class="small"><a href="posts/index.php?id='.$post['id'].'">'.$post['name'].'</a></div>';
}
};И все заработало