I am assuming that you are talking about InfoPath libraries in SharePoint?
Yes you can have sub folders, in fact MS recommends using sub folders to manage large libraries. The Office site has this nice reference you can use:
http://office.microsoft.com/en-us/sharepointtechnology/HA101736671033.aspx
Technically speaking SharePoint can support millions of items in a list, however, displaying all that data at once is a big performance hit. At the very least adding some indexed columns to your library and filtering the default view to return a small set of documents is best.
Hope that helps
Ted