I've had pretty good luck with this. Here's what I've done:
1. For models that are in subfolders, I make sure that the model is in
a namespace that can be equivocated to a folder by the Inflector. For
example, /app/models/extra/product.rb would look like this:
class Product < ActiveRecord::Base
or you could do
class Util::Product < ActiveRecord::Base
For controllers, do the same thing - make sure the fully qualified
name will match the folder heirarchy.
There's one big gotcha, though - your routing will need to specify the
full path to the controller, for example
map.connect '/products/:action/:id', :controller => 'subfolder/
Then everything should work.