Cat I only describes the max winds. It does not indicate the size of the storm. Katrina was only Cat 4, but killed many more people than other Cat 5's in the same area because of her size. Storm surge is a function of speed, duration and fetch....
So, Sandy will dead center the most populous area in the US, at high tide, with a huge size. They're calling for 80 knot winds from Virginia to New England. Already estimating 1 billion in damage. They'll be kayaking in city streets....