I was wondering if is possible with WP 3.0 to display multiple blogs as navigation items. Meaning that each navigation link within my theme is actually a blog page. Thus having separate blog pages called news, updates, and art.
Create the categories ‘News’, ‘Updates’ and ‘Art’ and then assign your posts to one of those categories. When you go to Appearance-> Menu you will be able to make your categories into navigation items. When you then click on one of the categories in he menu all posts in that category will display.
If I understand you right, you now have in your menu bar Home, News, Updates, Art and maybe a view other pages. News, Updates and Art are showing posts in their categories but Home is displaying all blogposts. Now, if you want to remove the special categories from the post stream, there is code you could insert into the template page that is creating the stream.
If you have not worked with templates, you could instead create a page that you will to make your Home page ( It could have a content or image slider and featured posts, for example). Then go to Settings -> Reading and select the Page you just created as your Home page. Then create a category for your remaining Posts ( it could simply be Blog) and add the category to the menu.