When setting up a cabinet/folder structure in a repository, a lot of people ask what is the appropriate number of cabinets and folders that one should initially create. As you can probably guess, there is no magic answer.
If your company well organized, it makes sense to establish cabinets that mimic your business units (eg departments). You may have to abstract higher (eg division) if you are setting up a repository for the enterprise; especially if your company is very large. If your company is not well organized or your application is not centered around business units, you may want to allow a free-form folder structure. See my other blog entry on locked-down vs free-form folder structure.
I follow the KIS methodology and try to limit the number of public (visible) cabinets to up 10. I also try to apply this philosophy to folders and subfolders as well. Any more than this, navigation can become cumbersome.
Be careful not to create too many tiers in your folder hierarchy – this too becomes cumbersome to users if they have to drill down a lot. I try to limit the number of tiers to up to 5. This might not be practical if you are setting up a repository for an enterprise. Then again, you might want to get a consultant if you trying to do this on your own without any prior experience.