If you simply want the books by author, then I would not bother with Collections. Sorting the books by Author with an option to fast-jump to authors starting with a particular letter is a standard feature of the PRS-950.
Having said that I would strongly recommend having Collections based on Series enabled as that means that you will see books in the correct order within such a collection on the Sony.
Whether you also want collections based on tags tends to depend on whether you have restricted their proliferation within Calibre. if they represent Genre, then they can be useful to use as collections, while if you simply let Calibre download them from the Internet you probably have too many for them to be useful as collections.