It's useful to be able to group controllers into directories. For example, you might have /posts and /admin/posts. The controller generator isn't capable of doing this, though it looks like there is partial support (admin/posts gets turned into Admin::Posts in the error messages):
% script/generate controller admin/posts
Started merb_init.rb ...
Connecting to database...
Loading Application...
/home/cvk/projects/gutenpost/app/controllers/posts.rb:61: warning: parenthesize argument(s) for future version
Compiling routes..
wrong constant name Admin::Posts
And if we try another way...
% script/generate controller Admin::Posts
Started merb_init.rb ...
Connecting to database...
Loading Application...
/home/cvk/projects/gutenpost/app/controllers/posts.rb:61: warning: parenthesize argument(s) for future version
Compiling routes..
exists app/controllers
create app/controllers/admin::posts.rb
create app/views/admin::posts
create app/views/admin::posts/index.html.erb
exists app/helpers/
create app/helpers/admin::posts_helper.rb
dependency merb_controller_test
exists spec/controllers
create spec/controllers/admin::posts_spec.rb
create spec/views/admin::posts
create spec/views/admin::posts/index_html_spec.rb
exists spec/helpers
create spec/helpers/admin::posts_helper_spec.rb