I vaguely remember being taught not to use a Feature Dataset to make things "look neat" in the database, and that the Feature Dataset should only be used when there was some sort of spatial relationship between the component feature classes.
The help file lists "organize thematically related feature classes" as a valid reason for using a feature dataset.
Is it a bad idea to use a feature dataset to group layers in the geodatabase, when the only purpose is to help navigation in ArcCatalog? Is there a performance hit from storing feature classes in a feature dataset?
Answer
Only if you plan to have users easily editing data in the feature-datasets. The biggest kick you will have is record locking; since editing a layer in a feature dataset will close out users from making other changes there.
That is probably your biggest functional killer, if that isn't a issue; then yes you can use it to try and make things pretty.
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