It's cluttered and not intuitive. The title and the icon for Gallery implies still images, not videos. Maybe there should be a separate video gallery or change the name/icon. Anyway, I think it's cluttered having a separate sub-galleries for pictures and videos taken with the droid. I'd like one gallery for all pictures, then within that gallery give me the option to sort or filter (with a filter option being "pictures taken with this device").
I personally think it's pretty intuitive (relative to the rest of the droid) and basically fool proof for finding images / videos (cluttered as it may be). The setup you're talking about is very similar to how contacts are managed on the droid with groups. I personally would prefer what you're talking about as well...but if you look at the number of people asking why some or all of their contacts are missing, you'll see that this method isn't particularly intuitive either.
I know what you're saying though.
edit: I can only imagine the difficulty that the android developers had coming up with a good compromise between the ability to customize the OS and ease of use.
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