Just read a satirical post in a german magazine, concerning the different kinds of file-sorting on desktop machines. Unfortunately, the article is unable to figure out the core evil, that is, the ultimate need to store everything in files and folders.
Honestly, try to remember the last time you tried to find a web page using, for example, the open directory project. I tried to remember that fact really hard, but as far as I'm concerned, I've been fine with the google search on top of my browser for the last years ( at least the years stored in my flawless built-in brain ).
The fact emerging is that with an ever rising size of storage media and a subsequent increased information density, it's close to impossible to manage files in a single hierarchy. And yes, Operating Systems should abandon the concept, at least for users. Of course, some kind of unique identification and retrieval path is necessary at least for applications to work, but not for users to find their files.
Are you using spotlight, Mac's built-in search, or Google Desktop or some other desktop search? You should. You'll never want to get back to actually looking for a file, it's so much more handy to just find it by searching for some text it contains.
And oh yeah, this idea is nothing really new, at least not, if you've heard about grep. It's a utility available on all POSIX-compliant systems that simply searches for a given string or regular expression in an arbitrary number of files.
Once again, please make computers for people, not for anyone else.