I just thought I'd add my 2 cents about how my playlists are structured. Basically, it's very similar to Tony's layout, with an extra sub directory for "All artists", to allow for quicker navigation to the various "Mood" playlists.

It looks like this:

Root
-All Artists
---Artists
-----Albums
-------Songs
-Mood1 ("Chill")
---Artists
-----Albums
-------Songs
-Mood2 ("Electronic")
---Artists
-----Albums
-------Songs
-Mood3 ("Snowboarding")
---Artists
-----Albums
-------Songs

...and so on. I have probably 7 or 8 "Mood" playlists, all with various stuff in them.

The beauty of the empeg, is that these nested playlists can be played at any level. So, if I want to listen to a certain genre of music, I hit play at one of the top levels. If I want to listen to a particular artist, I browse to that artist, and then hit play. The same goes for albums, and even songs. Another cool thing about the empeg, is that all of the music is stored in a database, and the playlists are really just shortcuts, so that the same song can be in 27 different playlists, but only one copy is actually stored on the unit.

Note also that in my layout, "All Artists" does in fact have every single artist on the whole player under it.

Anaywayz, I'm insanely happy with how this setup works on my player, so I thought I'd mention it here.