I was searching out some things and ran across an old blog entry from Bil Simser talking about the limitations of using folders because of path length limitations.  Here are a few observations from a recent client experience.

1) The path limitation is indeed 255 (or 256 characters).  It’s documented in some of the planning documents (and in a KB article as well if memory serves.)

2) The idea of using meta data to categorize information instead of folders has at least two limitations …

a) WebDAV doesn’t natively support the assignment of meta-data during a save operation.  Therefore saving with applications which are not fully SharePoint aware is a bad experience.  The documents end up in the “root” of the view since they have no data to categorize them.

b) Retreiving files without context from a SharePoint document library can be very difficult without the property information.  Since the WebDAV File-Open dialog doesn’t understand the meta data it can be frustrating to find the right document to email to someone when the file name doesn’t contain all of the useful information.  One solution around this particular problem is to use the free Outlook Power Tool for SharePoint from Winapp Technology.  Of course, that doesn’t solve the problem when you’re trying to use a file from another application.

In general… Use meta data if you need the ability to reorganize the data in multiple hierarchies.  Use folders to make it easy to use within non-SharePoint enabled applications.

As a sidebar, the experience on SharePoint with WebDAV is much better in Windows XP vs. Windows 2000.  Every application I’ve tested has been able to save to SharePoint via WebDAV in Windows XP.  The same applications have trouble with Windows 2000’s support for WebDAV.  XP also allows files to be dragged from one WebDAV folder to another where Windows 2000 does not.