file locations for books

Victoria Thomas' book for FrameMaker 7 simply states to put all files for a book in one location.  Is it good practice to just put all of the files in a single folder such as "C:\book", or can subfolders be used effectively as well?

I prefer to use multiple subfolders such as a folder for each chapter and then subfolders under each chapter to hold graphics files for specific sudheadings.  My plan was to do something like the following:

C:\book

C:\book\chapter_1

C:\book\chapter_1\sect_1_1_figs

C:\book\chapter_1\sect_1_1_1_figs

C:\book\chapter_1\sect_1_1_2_figs

C:\book\chapter_1\sect_1_1_3_figs

C:\book\chapter_1\sect_1_2_figs

C:\book\chapter_1\sect_1_2_1_figs

C:\book\chapter_1\sect_1_2_2_figs

And then put the book file in "C:\book".

I tend to save lots of chapter versions - one for each day of editing and sometimes several per day - rather than just keep saving one file.  I would like to keep the work organized but I probably need functionality more.  I like my subfolder technique but if it will cause FrameMaker problems then I will just use a different organization plan.

FM v7.1

Windows XP SP3