Yeah, some people aren't satisfied unless they control the file layout themselves. I've never understood this, as navigating the library through iTunes is so much easier than navigating through Finder. If you're going to be using iTunes as your primary interface, why do you care how the files are layed out? I turned on the option just because I like the fact that itunes puts it all in one place instead of all over my HD -- I hate clutter.
Besides, this is the way the whole industry is going. In 10 years I think the desktop metaphor will be gone ... no need to sort by folder when you can instantly search terabytes of data, and tag related items with keywords.