I like nested folders for a couple of reasons, some of which are:
- Clarity. A good structure will instantly signal what the page will be about, before a user or searchbot follows that link.
- Bolded keywords in URL in the SERPS.
- Using pages to flow juice to categories.
- Benefit of targetted anchor text, when using the URL for anchor text.
And search queries like: "pilatus mat" or "yoga accessories". Which will work better for these queries?
- Structure. Your URL's will reflect in your breadcrumbs, allowing users to navigate your site through URLs (By removing a folder and going to a higher level in the site).
- Silo's. After the Panda update, and this is speculation on my part, Google might lower the imporance of "parts" of your website. Let's say only your blog is of very low quality. Google could discount /blog/ when you have nested folders. With a flat structure your removed "parts" or higher level categories from your site, and don't allow for this.
Ofcourse there are benefits to going flat too. But nested folder trees are not neccessarily a bad thing.