An iteration plan can be group by category as well. So if you are happy
with the defined categories there is no need to create a separate folder
structure for plans. The feature got introduce to support a different
grouping than the one provided by categories.

One disadvantage of the folders are that they are stored in the plan not
on the work item itself. As a result you can only reassign a work item
to a different folder using the plan editor. However reassigning a work
item to a different category will update the category grouping in the
plan automatically.

Dirk Bumer
Agile Planning Component

ghu wrote:

It seems that we have many different ways to handle work item
management.
The most basic way is of course query.
My question is about advantage and disadvantage of using layers of
work item categories intead of using folders in Iteration Planning.

Apparently the folders I use to organise my work items within an
iteration seems to work fine if I create the corresponging work item
category to replace them.

Just wondering what are the pros and cons to use one or another?