Hello Simon,
I work at a state university and we used it for project/task management as well as document and web resources management.
It takes a bit of playing around but I've found that the folders we are used to are called workspaces in Feng Office and it works as a hierarchy in much the same way. Tasks and other items created in a sub-workspace can be seen in the parent workspace. The great thing about the Tag feature is you can give any item a tag, such as "Budget Fiscal Year 2012" and you can click on that tag and it will pull up each item with that tag. Additionally, selected a particular sub-workspace only shows the items in that workspace so you can drill down or drill up as needed.
I am currently using Feng Office to support non-profits in Texas. I've given each of the non-profits a workspace to which they can create projects and tasks. By putting all of these workspaces under me, I go to one spot, my workspace, to check all of my incoming tasks and email.
Overall, I've been very pleased with Feng Office in the education and non-profit sectors. My main instance of Feng Office is version 1.7.5 which seems pretty stable. The 2.0+ versions are completely different in look and menu options so if you are testing I'd check that one out. It has more configuration options but it is a beta version and shouldn't be relied on for primary use yet.