SharePoint Foundation 2010 Templates using content types

[Artois27]

I have created many templates and added to various libraries. My question is, when I click on Documents, New Document, the list is now quite long within a shared documents library. I wondered if within that list there could be folders, say for instance a folder for letters. You would click on that folder and then a list of letters would appear. Then another folder say new starter documents which you would click on and a list would appear with all the relevant documents and so on. Not sure if this function is something that SharePoint does and would appreciate any comments.