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From what I hear, Calibre is probably better for organizing large numbers of books, so if Calibre is working for you, it's probably not worth messing with the Sony software.
I don't use collections on the PC software on my computer. I do have collections on the Reader. When I add new books (i.e. if I buy a book from Sony store on my PC, then sync with the Reader) the book goes into the general Books listing on the Reader. I can then go into Collections on the Reader, choose to add content, and select the newly added book (or any other book) to add to the collection.
However, I don't have a large amount of books stored on the reader, as I read a lot of library books.
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