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I, for one, am eagerly anticipating the responses to this thread. Recently, I moved to a model in which I use several levels of subfolders to categorize projects. To give a very basic example, I might have the following hierarchy:

Personal (folder)
Home Improvement (folder)
Recycle paper, aluminum, and glass (project)

From the standpoint of keeping things organized within OmniFocus, this works really well. However, the one area where it falls a little short, in my opinion, is in using the Quick Entry window, since it becomes pretty much impossible to add a new project directly to the correct level of the hierarchy. For example, I wouldn't be able to add a new project directly to the "Home Improvement" folder using Quick Entry, since "Home Improvement" isn't a project. If I made "Home Improvement" a project, rather than a folder, I'd be able to add a new *action* to it using Quick Entry, but not a new project, since a project can't have sub-projects. I guess it becomes a question of semantics at some point...

What would be cool is if one were able designate a folder in the Quick Entry window into which to send a project. As it is now, I just send everything to the Inbox, which is acceptable; would be nicer, however, to be able to file effectively from the Quick Entry window.