I think about this one a lot. I have several fairly vague playlists (Guitar, Happy Classical, etc), but I get frustrated with the lack of control. But I don't want to make a bizillion playlists that have a couple of songs. I don't know if this is the right place to put it, but it seems like a topic to fight over :>
I started a thread here:
http://www.techlore.com/forum/thread/10898/
Probably best to weigh in your opinions there. I do prefer less lists rather than lots.