Taxonomy - populate child dropdown based on parent dropdown?
In Drupal 6, a good way to do this is to use a single taxonomy vocabulary and make the children terms selectable via Hierarchical Select.  This will give you a single menu of the parents and then when users select one of the parent terms the menu of related children will automatically appear.

However, Hierarchical Select hasn't yet been fully ported to Drupal 7 (most notably, Views support does not work at all) and the timetable to do so is unknown.

For Drupal 7, you could try using the Conditional Fields module (or just use the States API directly if you're a developer) to set up logic to show/hide child menus based on the value of the parent menu.  However, doing so has two big drawbacks:


Users will see all fields if they have Javascript disabled.
Depending on the number of items you have, this can get very complicated.