Kala:
Indeed, the latest version of DatGen doesn't use HairToner anymore, it uses the batch conversion thingy. (Make sure you have the latest debug version, though -- the 0.7.13 is very buggy when you use it for hair.) I find it slightly less easier to use than HairToner (but a lot more flexible), but a *lot* less of a pain than doing it manually in SimPE (or manually in DatGen, for that matter).
Have you read the tutorial?
http://www.datgen.info/tutorials/sm_hairtone.aspx It can be pretty confusing, I'll admit.
I know I've written a simpler explanation, let me see if I can find it somewhere... Ah, here we go:
1. Load the hair files into DatGen. Open SkinManager and then the Bulk Hairtoner and Search to get the files to show up.
2. Drag each .package to the correct color: Black, Blonde, Brown, Red, or Other. We'll fix the grey hairs in a bit.
3. Save and Search again to get the changes to show up.
4. Use the + boxes next to each file name to drill down until you can see the names of each texture. These look like "yfhairshortperm_black", etc.
5. In each hair color you will see one texture has the name "efhairshortperm_grey". Drag this to the grey color swatch up above. You won't get any dialogue saying something's happened, but it's been fixed.
6. Save
7. Click Search again to update the display, and click on each the name of each package again. You will see that instead of each texture being in, say, the "Blonde" category, most of them are "Blonde" and the elder texture is in the "Grey" category. If so, congratulations! You've categorized everything correctly!
Many people don't bother to set the "family", but I like to do it. Essentially it marks a group of hairs as being the same style; when you switch hair colors in CAS, you'll get the same style in the new color, just like with Maxis hairs.
If you would also like to set the "family" of the hairs correctly, that is even easier:
1. Select one of the .package names.
2. Fill in the button next to "Family Keys in this Package"
3. Put a checkmark by the name of each package in the family (style).
4. Click "Set family to all skins in checked packages". (the middle button)
5. Save and you are done.
I hope this is helpful and works for you. It's still a bit tedious, but less so than the purely manual method.