I disagree. One of the nice things about the current arrangement is that the package namespace is orthogonal to the module namespace. These two concepts really are orthogonal, so it's good to keep them that way. When they get conflated into one, you end up with Java's import mechanism which is a complete wreck. When you keep them orthogonal you can have some really nice package managers like Monticello for Squeak.
Care to elaborate on that a little? I'm not familiar with either java imports or monticello, but I have a little experience with python, in which each package lives in its own namespace. So it seems reasonable to me to put each package in its own branch instead of merging the various trees exported by all the packages into one big tree. It sounds like what you're talking about would do that by requiring that each package is at a single root like Elsewhere. Python doesn't allow you to rename packages so you wind up with either version numbers embedded in the package name, or upgrades that upgrade everyone whether they want it or not. Is this the wreck you're talking about? I've always felt a little uncomfortable that a package may scatter modules around the hierarchy. I suppose it could help haddock browsing and discovery, but in practice the haddocks all get installed in their own directories, unless there's some haddock merger I don't know about...