pirate, You don't have to upload to folders at all--it's nice to have the option though when you are uploading.
I am very happy with it and it has saved me tons of time--I was using it while it was still just a Beta version because the HTML loader was a pain for me. It's fast and it lets me upload pretty large images--that's enough for me!
I don't understand why everyone is making such a fuss about it--if the new uploader isn't working for you, and you've gone through all the trouble-shooting that you can (like making sure you have the latest version of Java/allow ActiveX/have latest version of IE or FF/etc) by all means, use the old Basic uploader--it's still available