What you're describing is an oft-debated feature of the player software.

Or misfeature...

Anyone have a link to one of the numerous other debates on this topic?

Here are a couple:

emplode sort left pane by name not added order
When is playlist sorting going to be fixed?

ISTR Hugo acknowledging at the US meet that non-alphabetical playlist display is being considered but didn't commit to a date or release. I guess not in 1.1.

Borislav