To be honest I've never really gotten the Finder's colored labels. That is to say, I've never really understood how to use them to good effect. However, this video tutorial from Living With Mac convinced me I need to take another look at the usefulness of labels, particularly when combined with Smart Folders. The idea is rather simple, but also potentially powerful. Label your files for different project names, or with different status designations (e.g. "needs to be finished", "waiting for" (some other information or person), "archive") then create Smart Folders that search for those labels. That way your files can remain in appropriate (hierarchical) folders, yet can be temporarily grouped according to status, project, etc. As mentioned in the video, this can also be a good way of "Getting Things Done." I'll warn you the video is perhaps a little under-rehearsed, but nonetheless it has some great tips you can use right now.