Hi John. I'm surprised this question isn't considered answered yet as the group seems to touch on all the bases. Here's a recap:
- Richard Getz highlights the ability to add keywords via folders but cautions against adding too many folders (historically due to crawling issues).
- David Lenehan cautions against too many folders causing duplicate content issues and ungainly website architecture.
- Keri Morgret highlights the usefulness of folders in Analytics to help track specific portions of content. The moz also discusses this in their excellent post: http://www.seomoz.org/blog/a-powerful-analytics-tip-every-website-should-employ
"By segmenting out traffic to URLs that include /blog/ and those that include /ugc/ (YOUmoz), we can see when/where/how each section is rising or falling in traffic and contributing to the overall site's performance."
- Fatwallet cautions against spam negating benefits in either and emphasizes linking as driving more value regardless.
- Aaron Dicks recommends a CMS to give you strength and flexibility in organizing your content.
- While Pashmina reminds us of the usefulness of redirects when curtailing duplicate content or sending lost link strength to a page in greater need.
And finally since you were asking about domain\folder\page vs domain\page you're not going to run into subdomain issues. If a short folder category makes since in analytics it's definitely worth it. Just look at the URL above... we're in the 'q' folder. Hope that helps.