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The project hierarchy in Eclipse is so closely tied with the filesystem to make view just a (limited) filesystem explorer. If you create a folder, it simply creates a directory on the disk. My preference is usually to have all our common source files in one location on my disk and shared between projects to minimise version control synchronisation problems (we use vss so Eclipse can't help) whilst the files I amn currently working on & project specific code I keep in a specific project folder. This works because in the IDE's I have used up til now, a project is not just a directory in the file system, but a 'virtual' organisation of project files. So, you can add a folder and put source files from many separate locations within the filesystem into it without requiring many copies of the source files. This is a feature I would like to see in Eclipse so I could recommend it as a standard IDE here. My appologies if this feature already exists in Eclipse - I was not able to find it.
*** Bug 8783 has been marked as a duplicate of this bug. ***
*** This bug has been marked as a duplicate of 6664 ***