How should I store user-uploaded images for a web application?

On my web server, I have two folders showcase and thumbnail to store images and their thumbnails, respectively. A database fetches these images to display them on a page.

The table column in the showcase table is s_image which stores something like /showcase/urlcode.jpg.

I heard that after around 10-20k files in a folder, it starts to slow down. So should I be creating a second folder, showcase2 once it's filled up? Is there some kind of automatic creation that can do this for me?

I appreciate your input.