I think this is in big part because we got save functionality wrong. The interaction you typically need is to save a snapshot into a different file, and continue to work on the current one. That is, the operation:
File -> Save As "file-snapshot.doc"
(you're now editing file-snapshot.doc)
File -> Open "file.doc"
Should've been a single operation:
File -> Save current as copy "file-snapshot.doc"
(you continue to edit file.doc)
The software could even prepend the current date/time to the snapshot name by default, or something. Then, the simplest way of working would always keep "file.doc" as the most recent version, removing the need for the "_v2_final_really_final_final_final" suffixes.
This is why naively surfacing file systems to users is such a mistake. My gut feeling says that documents should always contain all of their revisions — with a time slider, and marginalia always enabled. However, organization of the documents seems like a critical issue. I can tell you, from my wife's/kiddos desktops, that organization means "one big pile". I strongly suspect that "one big pile" is the right answer, no matter how much it pains my programmer's heart.
Some people organize their entire lives into boxes and containers and labelled drawers. Some people have, basically, a big pile that they just shuffle through when they need something.
For example, I prefer a backpack that's one or two large compartments. Yet they sell backpacks with dozens of little slots. That's too much for me, but somebody thought people wanted it, so somebody must. Over organization doesn't work for me.
The old Word document format (*.doc) could, by accident, contain older versions of the document, as a side effect of how editing operations worked on the internal data structures (not purging all deleted content right away, to optimize editing speed, or something along those lines). This made for some embarrassing cases when third parties received documents with hidden content they weren’t supposed to know about.
And we all know of the numerous cases where text was blacked out in PDFs by adding black rectangles on top of it, but the text was still contained in the document.
The reason one big pile is the answer, at least for me, is that to do otherwise would be to bog myself down in minutiae of taxonomy. Being hierarchical worked when I was still in school (and somewhat works for work), but one large bucket with the ability to search by content—think iPhoto letting you search for text in photos—is how I run things now.
