The folders are sorted in alphabetical order (see BookmarkBridge::GetAllFoldersWithDepths). It's been a while since that code was written, so I'm not sure what the impetus was for sorting. I'm also not sure if we get them back in "desktop order" if we don't do the alphabetical sort, but we could investigate.

I think the ability to collapse/expand folders is a good feature request. It's not time critical or tied to a specific milestone, so I'm lowering the priority.

Great, thanks! Collapse / expand folders would sort the usability issue from my standpoint. 

I mention desktop order because I have a few Bookmark Toolbar bookmarks that aren't labeled, and are identified only by their favicons (to save space). 

Thanks again :)

I vote add to this request that bookmarks be collapsed by default so you can expand the folders as you want.  This is the same on chrome in Windows and android.  It makes accurately adding bookmarks a huge pain as there is so much to scroll through to find what you are looking for if you have a lot of bookmarks.  Either defaulting to collapsed or having a button to collapse all would be great!! Honestly its probably my biggest dislike about chrome.

Fantastic!