How to structure photo files on disk (PrEl 9)

Hi
Rather new user of Photoshop Elements..running version 9
I'm in progress grouping the files in some sort of logical folder structure on disk....the idea I have is then to use "Keyword tags" in PrEl and take usage of the possibility of creating a structure based upon categories and subcategories underneath the "key word tags"....is this the right way of setting up the structure for my photos and video clips in elements organizer ?
When I have started playing around with this my question is - should I really create a folder structure for my photos on thefile system OR should I jsut add everything in one single folder if my intention down the road is to do the detaled structure with smart tags for each photo in PrEL......whats the best approach here and the most "common" one. Perhaps its a bad idea to create a lot of categories/sub categories for all photos underneath "KeyWord tags" in PrEL or is this what to use it for ?
//H

Hi and thanks for your answer....
but is Keyword tags section in PrEL where I should organize my structure (where I initially, before doing anything, have "people/places/events/others etc"....my idea was to add categories here like "Summer 2010" "Summer 2011" etc etc with their corresponding sub categories underneath....then, if "selecting" the tick box beside Summer 2011 I would instantly see all photos down that path, and if only selecting the tick box for a specific sub category underneath "Summer 2010" I will only see the photos associated to this specific sub category.....is this a good way of doing the structure in PrEl.......to use the keyword tags section with its built in category/subcategory possibilities OR is this something I should use perhaps the "Albums" functionality for ?
Thanks
//H

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The files are copied into the iPhoto Library which is in your Pictures Folder.
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How to structure photo files on disk (PrEl 9)

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