Which is to say, it does not match your style of interacting with email. Many Gmail users out there (Facebook mail, even?) are using email very differently and programs like this (Sparrow, Lion Mail) are catering for them.
Personally, I don't ever use folders. I've been there, and I'm glad I got it over with. I have no use whatsoever for Outlook-like complexity and complex rule sets. And please don't think that this is just because I don't deal with email a lot. But there are different kinds of people who use email in different ways. To each his own.
What is the best material you've read on why folders in email are inefficient? Do you have a blog post, paper, &c. that would be good reading on this subject?
There are only three kinds of messages: messages I have to act on, messages I want to keep and the rest.
The first, I flag and archive, the second, I archive, the third, I delete. The list of flagged messages then becomes my todo-list. If I ever need to go back to some discussion I did not flag, I rely on search. This really only works if threads are collated into conversations. Contrary to the original article though, this feature is not exclusive to Gmail any more, so that particular advice can be ignored.
I believe that this is one implementation of 'inbox zero', for which you should find plenty of stuff on the 'net (43Folders and Merlin Mann should be great starting points).
That said, I never claimed that folders are inefficient for email. I just said that my system did not involve any. That said, there are a lot of people who will say that a good searching mechanism is more convenient than a complex folder structure. (And conversely, that you only need folders if your search sucks. Search has gotten a lot better in the last few years.)
One might argue that the whole point of our brain is to recognize patterns. Therefore, we are very very good at grasping the context an email message belongs to. Maybe we don't actually need folders to signify context externally. Also, tagging seems to be a more natural way of providing context than folders, for the simple fact that messages might belong to different contexts simultaneously. Still, the only context I need in an email app is whether something is actionable or not. Everything else is just noise.
This is similar to the way I use gmail: everything that I need to act on is kept on inbox. Everything else is either archived (I might need), or deleted. This way, I never have to look for mail inside folders. If I need something, I just search it.
I recently activated the multiple inbox feature in Google Labs. I have two inboxes showing now - the default one and starred email. Since the space is free I just archive everything and rely on stars to note email that I need to either act on or contains some info I need to finish a feature.
Personally, I use tags more as a visual aid when sorting, and as metadata for searching (I have plenty of messages about the same subject with no common words between them).
I prefer tags over folders because I have have multiple tags per e-mail. I find this better because, sometimes, e-mail can pertain to a few different things.
And speaking personally, the one feature that I would love to see would be a way of attaching personal notes to an e-mail without actually altering the e-mail itself. I'm sure someone, somewhere, has implemented this but I have yet to personally see it.
Personally, I don't ever use folders. I've been there, and I'm glad I got it over with. I have no use whatsoever for Outlook-like complexity and complex rule sets. And please don't think that this is just because I don't deal with email a lot. But there are different kinds of people who use email in different ways. To each his own.