I've never had problems with indexing, or anything else for that matter, with my SD card. I carry around thousands of volumes of state and federal codes and case law on my SD card (that is dedicated to that, and that alone).
Not having an SD card means that I would no longer recommend getting a Kindle for doing quick out of the office research. It used to be that would work, and really well (just pop in the legal research materials SD card and off I would go).
As for making the product less "gadgety" as someone posted .... why not make it really super less gadgety?? I mean, they could print the books on paper and bind them up in a "book" and sell them one at a time!! Way less gadgety.
From my perspective, the product should be as gadgety-or non-gadgety as a person wants to make it. SD confuses you?? Then don't bother with the SD slot ... it won't change the operation of the device one bit. Folders confuse you?? Then, don't use them ... again, it won't stop you from using the product .... but why not have it there for the people who actually want to use it?? For example, with folders, the display could be more easily configured to allow the user to just display the author's last name ... click on that to open the "folder" and see the books for just that author. No more paging through a bunch of names or typing in the author's name to search for it. Again ... have it be an "option" for those who want to use it.
I still say that the goal of technology should be to make products that are easy to use for the technophobe, but that can be configured by the power user to do amazing things. Not to make them "less gadgety." If technology goes that route, we'll be back using 16th century technology before we know it. (Oh, nooooooo .... not a REMOTE control ... that's too gadgety!! NOT one of those automobile thingies ... too gadgety .... get me a horse!)