Multiple "Top level workspaces" won't ever substitute for a computing world used to organizing data into folders. I mean we even use physical folders at out homes and offices. To tell us that we don't need folders is synonomous with telling usto look elsewhere for a collaboration tool.
I'm just trying to set up a workspace to coordinate a decent sized project with a fellow student and have found that it will be impossible to manage anything more than a few files without the hierarchical storage abilities of folders.
Without folders, Live Workspaces won't even be a viable product for a studygroup not to mention a project group.
Until I see folders, I'll be looking at Google Docs.