I don't use my "Pictures" folder; I keep all my photos in iPhoto (which, itself, uses the Pictures folder).
I don't place Projects in my Documents folder, per se. My Documents folder is part of my filing system, no different than my physical files.
For example, within my Documents folder is a Role-Playing Games folder. Within that are folders containing third-party PDF manuals, notes for games I intend to run, notes for games I've already run, systems I'm writing, etc.