It's not perfect for sure and is definitely easier on a tablet with a large collection...
I use Calibre to create my shelves and keep the organization simple by limiting the number of shelves I create in the custom column (on Calibre).
BTW, I also have a Sony and the "collections" organization is not as developed on the one as on the Kobo (without rooting). I believe there are some other brands out there that organize the way you want out of the box, such as ecoreader, but you'd have to do some research on the forums to get more details.
A rooted Sony T1 using prs+ will also allow you to organize into folders on your device.
But then you wouldn't have the pretty light...
