How can I group applications?

My Applications folder is getting pretty full and I'm starting to lose track of applications. I want to organize them in groups, but I've read that some applications don't properly handle being put inside a folder.

1) What is the truth to this statement? Is there a list of applications with known problems? Is this a thing of the past? Does FileVault have anything to do with it? (I have FileVault turned on)

2) What alternatives do I have? How do you group your applications?

I'm currently considering making some other folder in my home directory (maybe "Shortcuts"), with subfolders for groups, and inside of those subfolders making symlinks to applications in the /Applications directory. Then I would drag my Applications folder off my dock and replace it with the Shortcuts folder. Do you see anything wrong with that?

Is there any mechanism built into Snow Leopard for grouping applications?

A little off-topic, but I hardly ever launch Applications from the Finder.

They are either in the Dock, or you can get to them with Spotlight (or your favorite alternative app launcher).

1) The pre-installed Apple applications generally won't get updated by Software Update if they are moved. The Developer applications won't work properly if moved. I honestly haven't tried complex installs like Photoshop to see if they can be moved. But most applications that you download from a website as a zip or dmg can be installed where ever you like -- I tend to create an "Applications" folder in my home folder for those applications

2) I think your suggestion is the recommended one. Note that the typical way to create what Mac OS X calls an "alias" (kind of like a windows shortcut, more like a unix soft link) is to option+command drag the icon to the destination. You could also have sub-folders in your shortcut folder -- "Games," "Productivity," "Communications."

Once the Mac OS X App Store gets started, I think there will be more options for organizing app store apps.

Very few 3rd party apps need to be in /Applications. You can usually tell as they don't look very Mac-ish, or are low-level requiring an installer and a reboot. I haven't seen any drag-and-drop apps that need to be there.

I put everything I install in ~/local/Applications, and I have had zero problems.

If you want further classification/categorization, I think your suggestion of Aliases is the way to go. The advantage here is you can have the app appear in multiple places, for example, VLC could be filed under both an "Audio" and a "Video" folder.