Personally I have my playlists arranged genre->artist->album->tunes, where genre is quite loose, and sometimes is just a list of tunes rather than of playlists. That way I can get straight to my blues collection, or my classic rock, or my "Songs that Kick Ass" playlist. It also allows me to shuffle all my blues, rock, etc., without doing a search. I've found this to be a bit faster than doing a search. It also allows me to put artists in mutiple genres. For instance, where do the Beasty Boys fit?
I would definitely recommend a level of playlists above artists, it can make things much simpler and yet more flexible.