I'm another one of the iTunes kids... and frankly, I think it's a beautiful system. Plus, whenever I download anything, I don't copy the files into the iTunes Folder, I copy them directly into the player. iTunes creates its own copies of the files in its own folder, and then I discard the download (which just lands directly on my desktop in the first place).
Everything, of course, is backed up to my own 250GB external hard drive, and now that I'm living back home again (economy booo), my dad's terabyte drive.