As far as I know there is no built in way to collapse the whole three or even a certain part of the tree, which would surely be a nice feature. Maybe in the new constructed file-storage for 4.x. We have customized file-storage so that the tree only shows the next depth, because our file-tree is going to grow to around 1000 folders. We don't necessarily want PG to show all documents at once.
P.S. You might want to switch to 7.1.2 as soon as it is out. We experienced some remarkable increases in performance. We are working with 7.1.1 (you have to
patch the plpgsql bug first though)...
