We had to do this at a previous job, but on Windows. We split it out by 100's so this gave us fewer levels to traverse. This was on Windows Server 2000, so a

We had to do this at a previous job, but on Windows. We split it out by 100's so this gave us fewer levels to traverse. This was on Windows Server 2000, so an earlier release of NTFS. The problem manifested itself by 100% I/O consumption by Windows Indexing service - turns out that when you added or updated a file it reindexed the entire directory. By using nested folders we reduced the number of files it would scan to an acceptable level. We then bought FAST. Microsoft later purchased them and folded into the Windows OS, becoming Windows Search. Which is pretty nice - I have it turned on for my local TFS workspace.