Although I'd add or subtract every once in a while, I've had my folders in Google Reader pretty much the same for the last couple of years (Tech, Developer Blogs, News, etc). It's worked pretty well on the whole. I've often had the problem when adding new feeds, however, that if they don't easily fit into one of my existing folders I don't usually really want to further complicate the existing taxonomy with more folders.
I started wondering if it was improving anything at all. As an experiment I went into NetNewsWire and blew them all away, moving all of my existing feeds into the same place. Turns out it doesn't make anything any slower and now I don't worry about where to put things. The lesson for me is that, once again: less is more and simple usually wins.
I may end up experimenting with something based more on how I read than content categories in the future (e.g. Favorites), but I want to live with this for a while first.