Firstly, though I’m more than a little late to be replying, folder navigation is why I’m posting myself, and the reason for that is organization.
I can’t speak for anyone else, but I listen primarily to Audio Books, and most of these are of long, epic novels broken into their 50+ chapters. Navigating down all the chapters of twelve other books just to get to the book I want is too much, especially when compared to the twelve folders I would have to navigate otherwise where I still using the Rockbox firmware on my now deceased E200. If all you do is listen to music that is always on shuffle anyways, then no you don’t need folder navigation, but when it is essential for you to have the right track selected, it becomes vital.
I’m actually a fan of the original Sansa firmware’s looks and features, but usually end up switching to rockbox for the folder navigation and manual bookmarking (another thing I’m here to beg for), and given those two features I’d be more than happy with the current firmware build.