Windows Phone 7.5 app.
I am thinking to restructure my app like creating separate nested folders in Visual Studio for better management.
e.g.

Will this kind of file structure affect the performance of the app?
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If you are referring to content files (such as sound or images), then I can’t think of any reason this would cause performance issues.
In terms of code, then it will have NO performance issues as the code is compiled down into the DLL’s and has no concept of folder structure.