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I love them. Search requires typing and I would rather push two icons and have my app open. Having pages of apps is just as easy to forget about apps. Do you really look at every page of apps all that often? I would be more likely to use search to find an app buried on page 4 if i didn't have folders.

As a side note, I like search, too. But I use it a lot less than folders.

I jb my iPad to get folders before Apple had them available. My iPad is jb free now.

They could make it better by letting the user define the number or apps in each folder rather than having a max amount, but that is my main complaint.
 
They just need to allow you to do the following and iOS will suit all requirements in terms of how people store things:

  • Ability to name individual pages and maybe have different backgrounds on them.
  • Ability to have pages scroll vertically to have as many apps on one page as you like (I loved that feature on my old JB iPad).
  • Ability to have the contents of a folder scroll vertically to have as many apps in one folder as you like.
 
I am thinking iOS 5.5 or 6, or so, will give us the kind of view option you get with iBooks, to switch to a traditional outline (hierarchical list) view, but perhaps also with meta-filtering in the header. At that point, you will know that iOS will be well on the way toward a geek-tweakable system, where you will be able to tap an expansion arrow to see into a given app's sandbox.
 
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