Directory Structure Vs all files in root directory

which is a better and more optimized option

[kunwarbs]

I am developing a website which will have almost a million pages. The pages will be generated through mysql database and cached into static HTML files to minimize mysql server overload.

Now the question is:
1. Is it better to generate all the files in the root say http://www.example.com/page1.html and so on OR is it better to create a directory structure and generate the html files in different directories?

2. Which is a better option in terms of minimizing server load or seek time?

[g1smd]

Putting files in folders might imply those folder names will also appear in the URLs.

Stop right there. The URL structure does not have to match the folder structure in any way whatsoever.