See excellent article at http://cnxn.ca/NoFoldersTutorial.html
This tutorial explains in detail how to use Outlook without folders or filing. We've christened this The AntiFile Methodology or AntiFiling for short. There is a single, fundamental objective with AntiFiling; minimize administration to maximize productivity. We firmly believe that people could file 95% less and be even more productive than they are now.
AntiFiling is also more than just “not using folders”. We’ve taken a hard look at the user interface in Outlook to eliminate things that tend to derail a train of thought. We wanted a method of organizing information that is universal – one place to look, consistent – one method to look for it, and simple so that it quickly becomes instinct. The less distracted we get in organizing and gathering the information the more focused we are in accomplishing the task.
Keep in mind, you may still use your folder in parallel with AntiFiling, but this may allow you to use a lot less of them and simplify your folder heirarchies for less filing.