Page/folder layout for a website.

[#1]

The company I work for has given me the go ahead to update their website. It was built several years ago and it has now been decided that it would make more sense to have it updated in house. The look of the site is fine and they are happy to keep it.
The original site was built with all the pages in one folder like www.blablabla.com/services.html www.blablabla.com/contact.html etc. I always build sites with an individual folder for each page. I have demonstrated to the company the advantages of changing to this layout, mainly the fact that when each page is in its own folder and called index, it can individually be listed by Google. I have proved this to them by showing Google search results compared with my own sites. I have now started changing the site to this layout, updating all links, images etc but it will be several weeks before the site is updated live.
My question is this, is there any disadvantage to having each page in its own folder and called index?
The existing site is www.selectservicesni.co.uk

[#2]

Hi Sean,
I've never heard of it being done this way for small sites, but I have sort of done something similar for my own site (I run a commercial site that has a free online art portfolio - because the art portfolio is a large site this has been put on a separate sub-domain, if I didn't have the sub-domain it would be in a separate folder with an index file)
I would rather keep all the html files in the same location where possible and concentrate on optimising the pages for your keywords. if you do a google search for "site:selectservicesni.co.uk" (without the quotation marks) you will see Google has all the pages listed. What I usually find is Google will list your index, but it will also list your sub-pages if it is relevant to the keywords searched for.
However if you feel that it works for you by doing it that way and you get the traffic results, then do what works best for you. 

[#3]

I've read that Google rates a page higher if it's file name contains the same letters as keywords in the file - but I've done no tests to confirm that.
I don't go as far a put  each file in it's own folder - that would just clutter up the file manager in my view, but I group pages in folders according to their subject.
But I agree - do what works best for you.

[#4]

I've not seen any data that shows it's preferred for static pages, but for dynamic things with query strings, it should be better. However, I find it's a pain having loads of folders with one file called index.html so would prefer doing something with mod_rewrite instead, but that's just me

[#5]

In my experience Google doesn't find keyworks in paragraph text unless the page is called index.  My own sites get much better listings when using keywords and not "site:www.mydomain.com" as this is obviously not what people would be typeing in.
I have gotten used to using seperate folders for each page with sub folders like img, swf in each. It also leaves me in a better position for expanding or using sub domains. So long as noone knows of any disadvantages I will continue.

[#6]

I know users wont be doing that kind of search, I was just showing that the pages are listed, and if they are listed it does mean that Google has filed the pages that will be displayed under some keywords and terms.
Whats worked for me in the past is to make sure my chosen keywords in the meta tags (general and page specific keywords) are mentioned at least 5 times on the page  with some being included in the headings, put in bold etc., then every image alt tag should include some keywords etc.
@mal0z: I was speaking to another site owner a while back, and they opted for fully optimising their site which included making sure the page names and image files were named the same as their keywords and they said it increased their traffic. I've never tried it to this extent myself but have took this into consideration for the site I'm updating, as yet its too soon to tell if its worked or if I've just given myself more work, I'll let you know if it pans out