Google Toolbar 3 Beta update

I imported my bookmarks from my work PC and well, nothing really exciting happened. I was given the same options to edit labels and shuffle my sites around. The only downside I saw was that I now have so many labels, some overlapping that I need to spend about an hour doing a reorg. With so many labels when I click the bookmarks drop down it scrolls way off the screen (I run 1600×1200).
I know Google loves labels, but I wish they would have used cascading folders. Not just for continuity from existing bookmarks/favorites, but also to remove a lot of redundancy from the list of labels.