This a .TXT version, have nicer .PDF, .RTF, .DOC versions available don't want .DOC formats and some don't want emailing back and forth so chose this format first here.
I wanted a method for logically organizing programs/applications and data (documents, pictures, video, music, development, etc.) into categories (hierarchical), fast and easy to navigate. Categories/items are from Start Menu and your user folder and sub-folders.

Developed 3 easy methods after researching WEB, MS doc, forums, and some experimenting. Common to all methods is your User folder ("C:\Users\<your user name>") as your parent (root) containing all other categories (folders). As such is where you start your organizing. Hopefully you are already organized somewhat, and can easily add additional folders helping to organize your new categories. Any modifications (add, delete, move, rename, etc.) to folders/items/shortcuts will be automatically reflected when navigating. Only need to create a parent category for programs/applications, Start Menu replacement.

When method is implemented, windows automatically maps in all your existing folders and their sub-folders except for Expanding Folders. I'm assuming you know how to drag/drop or other methods for creating shortcuts. The following items can be done in any order, including 3 methods:
Create a programs folder in your user folder for organizing programs/applications:
------------------------------------------------------1. With Windows Explorer navigate to "C:\Users\<your user name>" and open it leaving on desktop. This will be your parent dir and useful reference later.
2. Create new folder in your user dir and suggest naming it "My Programs". Can name it anything, I used this name in convention with existing folders such as "My Documents", "My Pictures", "My Development". Should only contain shortcuts or copies of folders containing shortcuts or won't work with hover to show contents. Start Menu just that.
3. Navigate to "My Programs" for creating the organized categories (folders and sub-folders) for applications from Start Menu and/or other places. Can re-org anytime and main program categories should have logically related sub folders (categories).
In my case (as an example): Accessories, Backup, BrowsersAndTV, ImagingDrawing, InfoDB, AVTools, Office, SysUtils, Virus, others. And as example my InfoDB contains GoogleEarth, PersonalBrain,Wikipedia, Britannica, now and more to come.
Also "My Development" (in parent ) contains shortcuts to compilers and tools along with project folders with actual files used (not shortcuts).
4. Navigate to category(folder) desired for adding programs/applications and open it.
5. Go to Start Menu (or some folder with programs), Create shortcuts or copy items or folders (only w/shortcuts).
6. Shortcuts can be created in user dir (parent) for convenience/fast access.
7. You can also open your user folder in separate window for access to Start Menu items to ease creating shortcuts from there to your folder: Navigate to "C:\Users\<user name", and click on "Organize (top tool bar), Folder and search options, View tab, select "Hidden files and folder and drives", then select "Show hidden files and folders". Now navigate to Appdata\Roaming\Microsoft\Windows\Start Menu\Programs. Open folder and leave on desktop as well for reference in making shortcuts. Un-do show hidden when done.
8. Any program/application installs/uninstalls/features added will require maintenance of your program shortcuts or copied folders.
Start menu access in r-pane (where Control Panel etc. displayed):
1. R-click Start Menu, choose properties
2. Scroll down to "Personal Folder"
3. Check "Display as menu" radio button
4. OK both dialog boxes.
5. Now you should see your User name with r-arrow in r-pane when you go to the Start Menu.
6. Hover over or click your User name, all folders in your User Folder are displayed and can navigate to where you need to just by moving over folders and finally click on item to launch. Anywhere you navigate (including your User name in r-pane) you can r-click your highlighted folder, options display and very useful is "Open" which will open up folder in Windows Explorer. I use sometimes to keep a folder open for constant reference for adding shortcuts, creating new sub-folder(s) or re-organization.
* Start Menu adding expandable folders (personally don't like or recommend!):
1. Go to Start Menu and click All Programs
2. Pick any folder, any folder, this is an easy trick
3. R-drag to desktop and create shortcut
4. Rename to anything, lets say "Expanding Folder"!
5. Open it and delete all previous contents, leaving an empty folder and close. You now have an empty expandable folder at your dispense.
6. This can be used in many imaginable ways but for one way you can r-drag it to Start Menu, hover over "All Programs" until the folders are visible (use arrow key if needed to scroll) , and drop (let go r-button) when you see a line between folders when you are moving around folders.
7. Rename your folder to what ever (I liked "1-Programs") so it was first folder displayed.
8. Navigate to the folder in Start Menu (All Programs), r-click to open to put on desktop for working with Windows Explorer having your folder currently displayed. This is your destination for shortcuts and folders containing shortcuts.
9. You can not pin folders to Start Menu and why bother? Other methods more convenient.
10. Make copies of the expanding folder in the same pane .Repeat as many times you want to create multiple expanding folders (copies) which them selves can go thru this process as well building up a hierarchy of folders as you want.
11. Start renaming these folder copies to your logical set of categories. Suggest leaving original Expanding folder alone for future use, however still have desktop one available.
12. Now you can r-drag/drop/copy any number of other items or folders from Start Menu into your new expandable folders.
13. Repeat this process till built up an organized hierarchical set of expandable folders and items.
14. Optionally close Windows Explorer, but can leave open and test you Start Menu Expanding folder for their looks and if need be re-organize.
15. First one, of course, I would drag/drop my "MyPrograms" since it's all shortcuts anyway.
Creating toolbar on taskbar:
1. R-Click on taskbar, move to top (Toolbars), then move to bottom (new Toolbar) and click on this. This will bring up a browser for a folder to use. Navigate to C:\Users\<your name> and select it. Select Folder to create new toolbar called by <your name> ("Marco" in my case).
2. To right of your toolbar are ">>" symbols, click on this to start immediate popup browsing from your user folder (normally contains My Documents, My Music, My Pictures, etc. standard user folder items created, and maybe some items). Hover over folders to see items and sub folders (popups too). Click on item when found and default program will launch (media player, word doc, etc.).
3. Optionally you can r-click on your toolbar or any popup highlighted folder, and open folder in WinExplorer.
Note: You can modify folders contents (move, add, remove, re-organize, etc.) and will automatically see while pop-up browsing.

Note: any item can be made shortcuts in any other folder including your user folder. Even items such as control panel or accessories/items can be put in your programs folder. For example I have virus, backup, calculator, phonelists.doc, and tasks.doc shortcuts in my user folder. A convenience option.

Note: you may want to r-click in any folder and "sort by name" to get folders at top and items at bottom.

Note: Also added "Installs" which is a hierarchy of logically categorized folders for program installations. CDKeys.doc in this folder contains all the Keys and notes.

Note: This works with XP (at least) and up.

Note: the jump list methods I've seen mentioned, are for MRU lists for apps, not at all a solution. Even if you could lock items to lists, I believe a limit of 10 exists (adjustable) for a single list only. Ugly idea and centered around apps not categories. Ugly idea!
In summary:
This makes it so much easier to launch programs and access documents rather than navigating folders in windows. Windows Folder navigation requires multiple clicking/double clicking on libraries or folders/sub folders and then double clicking on items to invoke them such as documents/drawings/etc. Done either via navigation panel or directories in Windows Explorer. I realize that process can be simplified a little by changing the Folder Options to single click in Windows Explorer and "Show all folders option".
Keep in mind I still use "Pinned" programs on start menu as they allow easy access to MRU lists (Most Recently Used) files associated with program (most programs have their own MRU lists as well).

I like a clean desktop with a easy organized method to find what you want. Same with my physical desktops. I've seen at some work sites where peoples desktops are pilled high with stacks of paper and manuals. Their computers don't look much better either. The screens are filled with icons to programs and documents or what ever. Mind boggling and this is what Win8 new UI basically is. Windows has always (as far as I can remember) allowed you to drag and drop desktop items onto application and have it load and run.