When a user uploads an image to my site, the image goes through this process;
You might consider the open source http://danga.com/mogilefs/ as it is perfect for what you're doing. It'll take you from thinking about folders to namespaces (which could be users) and let it store you images for you. The best part is you don't have to care how the data is stored. It makes it completely redundant and you can even set controls around how redundant thumbnails are as well.