700 files in one directory? I can't believe it would be easy to find anything. If you don't have a problem with that, more power to you. Personally, I like the HTML files in one directory and the image files in a different directory. The reason is, that is how I have them organized on my computer. Of course, certain files need their own directory, such as CGI or password-protected areas.

I also find it easier to do housekeeping. There really is no reason to keep unused files on the server. Think of the poor guy who may inherit your filing system. YOU know where everything is, but they don't. I think it may speed up the site, if you separate images from code, especially on a large site. Why should the server have to run through hundreds of files when it can jump to a selected directory and only search through a few dozen?

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DrTandem's San Diego Web Page Design, drtandem.com