It seems odd, but last month in google a search for wallpapers would display our site on page 18 and amazingly we received visitors.
since then I changed the folder from
/wallpaper to Wallpapers and now we are on page 12 and receiving even more visitors. So from this little experiment I would say that google definitely looks at folder names for ranking sites.
Managed to go up 6 pages from just changing the directory name, although this coincides with jagger so that might also have some effect on the SERP's.
I'm amazed by the amount of people searching through that many pages of results.