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Rael Dornfest has given up on email folders.

I’ve spent an inordinate amount of time over the years acting as
librarian for my mail archive, manually sorting and sifting, carefully
categorizing, and lovingly tending my history in email. After spending a
little time with ZOE and thinking about the single archive methodology
in Gmail (don’t sort, search), I’m starting an experiment today where
any mail to be kept for any reason I’ll be dropping into a single
Archive folder and relying on full-text and To/From/Subject-based
searching rather than sifting through project-, person-, or
mailinglist-specific folders. I’ll check back in and let you know how I
get on.