The latest version of Photoshop has a feature called "layer sets" (folders) that
allows the grouping of layers inside the layers palette. Folders can be placed
into the layers palette and layers can be moved into and out of the folders.
Folders can also be moved up and down inside the main layer list, or turned on
and off, just like normal layers. 

The main interesting feature of folders is that they have all the properties of
layers. They can be turned off and on, have their opacity and blend mode set,
and have "layer masks" associated with them. They can be linked with other
layers or folders and moved as a group. In order to determine what a folder's
graphical representation should be (for the purpose of blending or compositing),
the folder's contents are blended and composited as necessary and the result of
this sub-composite is used.