Gmail Labs recently added a nested labels feature to Gmail. This is a feature that has been available for quite a while thanks to the Folders4Gmail GreaseMonkey script, but it is nice to see Google move to add this feature in Labs so it will work in any browser. Out of the box right now it doesn’t work quite as well as the Folders4Gmail script did, but presumably Google will tweak it over the next few weeks to bring it up to that level.
New in Gmail Labs: Nested Labels has problems
http://bugsaroundme.blogspot.com/2010/04/new-in-gmail-labs-nested-labels.html