Originally Posted by Jim Royal 
If you think about it, a deep folder hierarchy is a lot like a keywording scheme with the exception that a photo can be in only one folder. What if the photo is of a bug on a flower? In which folder does it go? And once you decide that it goes in either "bug" or "flower," how do you remember which one when you go looking?
That's what a lot of people miss. If you take the time to keyword, it's essentially placing that same file in multiple folders simultaneously, without needing to manage multiple files/folders on disk, and new "folders" can be created dynamically by adding new keywords.