You're either going to love that idea or hate it. Personally, I have largely done away with subfolders and trust metadata and super-fast system searches to locate exactly what I need faster than I could ever locate something by drilling down into subfolders.
Suction is a free utility that helps you get to this new state of being by moving all the files in a folder tree to the root location, such as your Documents or Pictures folder. It even elegantly handles duplicate file names -- an inevitable hiccup when consolidating files from a bunch of folders.
Are you a true believer in my single-folder file management theory, or do you think I'm insane? Sound off in the comments. I'd love to know if anyone else has bought into Vista search and flat folder organizations the way I have.