I ran across Picard categories in a totally different area of mathematics, but maybe it helps.
In short, a Picard category is a group object in the category of groupoids.
Picard categories come up when you study Picard stacks. Roughly, a Picard stack is a sheaf of Picard categories. The classical example is taking a two-term (perfect??) complex of sheaves, and associating to such a complex the groupoid quotient of one term by the other. This is important when you want to produce a geometric object from such a complex. This is an important tool in defining virtual fundamental classes as in http://arxiv.org/abs/alg-geom/9601010.
Before I tell you totoo many things that are not true, here are the references I know of:
Lecture notes of Martin Olsson, Lecture 5. You can even watch it on video.
The definitive reference is Exposé XVIII of SGA 4.
And finally there are very friendly and down-to-earth lectures of Barbara Fantechi at http://www.openeya.org/sissa/ [link dead]. I think lecture 3 or lecture 4 is about Picard categories.