I do use the time accurate place names on the profile itself. However, for categorization, either Bath Township, Greene County, Ohio or Fairborn, Ohio will allow others to locate their ancestors.
And, no, I don't think categorization is a waste of time. I use location and cemetery categories all the time to locate people. For early pioneers, I find that categorizing the land tracts (ex. Borden's Tract in Virginia) also helps locate people as towns are few and properties are specified in the records by trees, rocks, streams, neighbors, etc. that no longer exist.