I am changing the whole of my URL architecture of my site after a few comments from people... I have reduce it to for example: www.domain.com/products/televisions/sony-widescreen Would you say that the "product" dir is in there for no reason or would it in fact help Google realise you selling something? Would I be even better to make it: www.domain.com/televisions/sony-widescreen Just for the record i don't sell Televisions. Its just an example.
If anything, I would say having multiple directories or sub-directories is purely at your discretion. It may make things simpler for you as far as keeping things organized, but it's not a necessity for your URL structure. I'd say the shorter the better, though, but again, this is just my opinion. Your main focus should be having the main keyword for any particular page in the URL, especially if you are changing you URL structure for SEO purposes. It won't "help" Google to know you are selling something, but your URL can give visitors an idea of what you have to offer them.
Yes is better with hyphens > http://www.google.com/support/webmasters/bin/answer.py?hl=en&answer=76329