Could I use categories for users instead of user groups?
If the users will never have access to the Craft CP then you can use categories or any other applicable field type (i.e. dropdown, radio buttons, tags, etc.) to create differentiation between the users. It really just depends on how accessible and/or 'static' you want the groups or sudo-groups to be. Categories and tags for example can be created dynamically, without having field editing privileges like a drop-down field would require. But since you are currently the only admin, it probably won't make much difference in the end. I would however, at a minimum create groups that differentiate between users that have different access privileges to the CP, otherwise it's totally up to you — whatever makes most sense and is easiest to manage.