By repository you presumable mean Document Library.
If so instead of using folders to re-organize the files; use Views.
When you assign a file in a document library to a field you have just added to the doc lib called for instance Category1, you will not lose any versions of the document.
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You can create Views on the different values of category1; group on the field; filter on it etc.
FAQ sites: (SP 2010)
http://wssv4faq.mindsharp.com; (v3)
http://wssv3faq.mindsharp.com and (WSS 2.0)
http://wssv2faq.mindsharp.com
Complete Book Lists (incl. foreign language) on each site.