the pnd system actually will scan for subdirectories, so you can organize your apps; /pandora/menu/apps and /pandora/menu/games will work (for example) and still show their goods in the appropriate menus.
I think I recently introuced a change to limit how far it will descend during a scan, but I think I set that only for root of SD scans. (As of current hotfixes, you can put apps at root of SD and they'll be found, too.)
jeff