I am also one of the proponents for sub projects but according to Omni this is really tricky to implement UI-wise. We had a good discussion about it in this thread:
http://forums.omnigroup.com/showthre...page=2&post=19
The suggestion here is to give more power to individual actions instead.
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I try to use as little folders as possible because whenever you use strict categorization you will eventually run into problems of gray zones (one item might equally well belong in two categories).
Over-granularization of folders will get you into this kind of micro-management-hell-scenario quickly.
One thing I have noticed about myself, which is potentially dangerous, is the fact that it is very tempting to organize projects into folders (increase granularity). Later on when several projects have been completed I don't collapse folders to reduce complexity as needed. It is kind of like; I don't want to ruin my finely thought out structure.
How many projects do YOU need in a folder before your fingers start itching for cutting that folder up into sub folders?
I would love to forget more about the planning mode and live more inside context mode but it is simply not possible at work because everything here is so project-driven. Besides, if I'm going to show some tasks to someone that don't understand OF and GTD; I can really confuse them by switching between planning and context mode.