It seems crazy, but it may be more intuitive for some people. People often use muscle and visual memory to remember where things are, not necessarily by name of location.
Edit: Plus, you can always add naming and search with it. And Microsoft has an interesting grouping concept in Windows 8 with grouped and optionally named sections, not folders.
Doesn't seem crazy to me at all. It works well for that use case, but it doesn't scale well to hundreds of entries.
Once you get into groupings you're creating the same problems that people have with filesystems (implicit or explicit organization challenges, loss of discoverability, etc).
Search (or something like what we call "search" today) might be the best step forward from here, but you can layer that on top of any other (or no specified) KV metaphor you like.
Edit: Plus, you can always add naming and search with it. And Microsoft has an interesting grouping concept in Windows 8 with grouped and optionally named sections, not folders.