I would make a folder structure parallel to the family tree structure ... in other words, a folder for the farthest back male ancestor and spouse, then subfolders of that for each of their children (with spouses sharing the same folder together) and subfolders of each of these for their children, etc. The problem I can see with this is where to put a document that is relevant to more than 1 person - i.e., a census record would document all members of the household, unless you want to duplicate the document file and put it in each appropriate folder.
I'm not at all concerned by having lots of folders - it keeps things well organized and you can see which records belong to which persons, which is much better than having a single folder containing records for several people (no matter how you decide to group them), which would not be immediately apparent which person(s) each record is relevant to.