mixing Block and Inline children

I remember reading something about html5 not allowing elements to have  
both inline and block level children. I can't find where I read this.  
Anyone have any idea? Is it true?

If it is true, what will happen to people who use techniques like  
Suckerfish?
http://www.htmldog.com/articles/suckerfish/

<ul id="topnav">
   <li>
     <a href="index.php">Home</a>
   </li>
   <li>
     <a href="announcements.php" accesskey="1">Announcements</a>
   </li>
   <li>
     <a href="cats.php" accesskey="2">Categories</a>
     <ul>
       <li>
         <a href="cats.php?cat=Condolences">Condolences</a>
       </li>
       <li>
         <a href="cats.php?cat=Congratulations">Congratulations</a>
       </li>
       <li>
         <a href="cats.php?cat=Get Well Soon">Get Well Soon</a>
       </li>
     </ul>
   </li>
</ul>

Will this become invalid or is <ul> inline now as well? Or maybe I'm  
just confused about something I misread and can't remember clearly.