I think you're confusing Space and Stacks.  Spaces creates "virtual desktops" to reduce screen clutter.  Stacks is for folders in the dock, and I agree that if you can' browse more than one level deep with them it's a step backward in a way, though the fact that they don't vanish the instant you mouse away and that you get live previews of their contents is better than the old dock folders.  Maybe if enough people sumbit feedback Apple will make it possible to browse deeper, seeing as I can't see any technical reason why it wouldn't work.