SharePoint 2007 had limitation of folders support for the KPI Lists. Whenever you tried to set Folder as a source of your KPI, SharePoint gave you an error that folder can't be selected.
To avoid such situation your had to maintain KPI values in different list or use Views. The issue with Views is that they don't allow you to assign the permissions per View, so you can't have groups of data and assign different permission for KPI values based on views.
The only solution for SharePoint 2007 was usage of separate Lists.
SharePoint 2010 fixed this issue, and now you can organize you values per folders in one List for KPI
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