In the past there was no point in adding category names to your keyword lists, as Apple added them implicitly. If you had a game, you didn’t need to add “game” to the keywords to be found.
An example – searching for “Chomp Reference” yields one result in iTunes, but zero results on the device.
“Free” still works when an app is free – “Chomp Free” finds chomp.
We’ll have to wait a couple of days to see whether this is temporary or not. But if this rule holds, it means that you should add your category name to the keywords.
Oh, and yes – on-device search provides results that are slightly different than iTunes results. If you want to check your app’s position in the store search, you need to do it on device, or using AppCod.es.