Join Date:Joined: Jun 2007
When you're in the music player, press the top right icon to get to the now playing list and then press top right again you'll get a list of tracks on the watch, you can scroll to playlists, albums, artists and folders here so it definitely supports playlists to some degree but there's only 4 default playlists of recently played, recently added, most played and favourites. You can add tracks to favourites by holding down on them in the tracks list and selecting "add to favourites" so it seems you can use favourites to create one single playlist but you can't set an order as far as I can see so the tracks will still order themselves alphabetically by artist.
If you hook it up to the computer there is a playlists folder but it doesn't seem to do anything. I've copied m3u and pla playlists into both the music and playlists folder to no joy. You can create new folders within music and use the folders menu on the watch I suppose but that's gonna put them in alphabetical order so I guess the only way to make a playlist on the watch work in anything but alphabetical at the moment would be to edit the id3 tags of your mp3s to make them all appear to be on the same album. The existance of a playlist menu and playlist folders is a good sign though I assume.