There's a middle ground between the bare minimum and a crowded mess. Think about the search field in iTunes (or the music player of your choice). Is it really necessary? You can find and play all of your music by simply scrolling down your list. It's not needed, but I sure as hell wouldn't use a player without a search function.
I could make the same point about the PS4 OS: Are any kind of sorting/filtering/searching functions needed? You could find and run your games even with one long, unsorted list. It would suck, though.
I don't think basic organizational features would make the PS4 OS' UI too complex.
I totally agree with you. Sony has opted for voice search in this context. Whether or not that's a good idea is a broader question – I find it works pretty well, but I also know what people mean when they say hollering commands aloud to your black box still feels eminently stupid right now

So considering it is a "distant" screen type interaction I see the logic, and it works somewhat ok (?) for Xbox.
And again for the record, I think they do kind of a bad job with giving you a good view presentationally of your game library overall. It IS easy to forget stuff like that you downloaded Don't Starve, it floated off the menu, and it just tweaks your fancy one day when you happen to notice the actual icon again. I just disagree that custom folders specifically are the best mechanism to address the concern. I want something more powerful and, forgive the term, dynamic.
There's probably a way for them to solve the organizational problem – which at it's core really revolves around hiding shit in certain contexts, it's in many ways more about what users
don't want to see – and the Downloads List problem altogether by combining them more concisely.
So if your Library was far left (immediate access on boot) and would branch out into:
Installed:
All Games
All Apps
Game Genres ( > Subgenre tags filter view)
Game Demos
Game Betas
DLC
and then a Downloads view in there with all the same filters, that could work.
And so to your earlier point, yes since it is an entertainment system, and people like to sort of look at the wall of content they may have access to and just revel a bit, I say do it! I'm not really anti-folder so much as I don't think that's
enough.