AnemicOak - they have this bookshelf option on the device where you can sort titles into groups. It doesn't show up in the file system when you connect your Touch to your PC though; I set up my own file system in that end for my own organizing sanity. Calibre is usually what people use for sorting, and is much easier to use. I usually ignore the Kobo Desktop program altogether.
The firmware is not perfect but it is a billion times better since the initial release. For me at the moment, the lingering issues that I have is once in a while the book pages won't turn or the book freezes. To fix it I just close the book or restart the Kobo. I personally haven't noticed any other major issues since the last firmware update at the beginning of July (and I use it every day). You should have a peek in the Kobo Reader section of this forum, and in the latest firmware thread: http://www.mobileread.com/forums/sho...d.php?t=184373
Edited to add: The developers also keep an eye on the Kobo Reader section of this forum and take requests for firmware changes there. It's nice to be heard.