My girlfriend was not a fan of the system when I described it. Alas, I still need to fold laundry.
We use one of these http://www.amazon.ca/dp/B00578QVGC in my kids room. On the top bar is the out of season clothes, and on the bottom bar, which is at an accessible height to my girls (4 and 6), we put the in-season clothes.
This works really well since little kids are way better hangers than folders. So when I take laundry out of the dryer, I basically make a pile for the kids clothes and then yell at them to hang everything up. They love it and it saves me lots of folding time. Plus, no wrinkles!
We got rid of our space-stealing dresser and just have a little plastic set of drawers for socks and underwear, which probably could just be in stuffer bags hanging off the clothesrod now that I think about it...
It's a lot like a dish washer. By the time you scrape and pre-wash and load all your dishes, you could have just washed them and put them on a drying rack. The real value of a dish washer is it serves as that drying rack. Most kitchens don't have a lot of dedicated space to dry dishes.