Purpose of Workspace Collaborators?

I am trying to setup the equivalent of a shared folder for my small company. It looks like I have 2 choices: Workspace or Group. Groups don't allow subfolders which pretty much makes them unusable, so I started putting together a workspace. I setup everyone with Collaborator permissions, but they don't seem to be able to add anything to the workspace. Why not? What's the purpose of a Collaborator if they can't add files?

As an alternative, is there anything that allows me to create folders/subfolders and allows multiple people to upload files? This seems like basic functionality for a small company, and I am surprised it's not more obvious how to do this. We had enough problems with Google Docs that we don't want to go with that, and Zoho gives the appearance of better usability and functionality, but is that just a facade? Is it really usable for a small company of more than 2-3 people?

Thanks,
Matt