I use 23 folders related to tasks (WordPress, Office, Scan+Print, GPS, News general, News Apple, etc). 195 apps mainly for tests are installed.
I use them extensively, but try to limit them on my main home screen. I like folders since it limits the number of home screens I have (which I use 3)
I keep my most often used apps on the home page with no folders, then start using folders on page 2. I've got a total geek-fest going on as far as how I use my folders. On each of the following pages starting on page 2, I have two columns of folders running down the left side. The right two columns are reserved for frequently-but-less-frequently than page 1 apps.
There's a method to my madness. I primarily use the phone one-handed in my right hand, so I keep my most frequently used apps towards the bottom left quadrant of all the screens for easiest thumb access. If I'm going to dig into a folder, I'm probably going to be holding in in both hands.