5 is definitely being over conservative...but I wouldn't want anywhere near enough books to fill the 512M. I imagine maybe 100 would be my real practical limit.
For me, I'd rather have mobipocket "reading lists" than folder structure support. "Reading lists" are like tags. A book can belong to multiple reading lists.
I subscribe to the tagging rather than the filing philosophy for information (images, emails, books etc)
Support for BOTH "reading lists" and file folders would be optimal and allow users to work the way they want to.
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