I was surprised a few weeks ago to see a report of ~30s wait times when going back to home on the K3 with ~1,500 ebooks. I have ~1,000 ebooks on my K3, all managed by Calibre. They are spread across 11 folders, based on tags. I suspect even more folders would help (a sub-folder for each author for example) , but even with 11 folders I see no delay switching back to home when in "most recent" mode. It only takes a second or two to switch between home's ebook sorting options, but a search can take a while.
I have not been able to find definitive information on FAT32 file operations, but it looks like the
Directory table is a linear list (i.e. a table). No modern general purpose filesystem would be designed this way, because average and worse case performance of some single-file operations will be proportional to the number of files in the folder. See, for example, a discussion of how Linux's ext3 improved on ext2 at
Directory indexing. I'm not sure O(n) file performance is an issue in practice on the Kindle (even though there are multiple files per ebook), but it could be and adding sub-folders is easy with Calibre and likely can't hurt.