By system. A lot of emulators will request a specific directory and even though a chunk of them will only show games with the correct file extension some don't so you could get a jumbled mess. I do add the occasional section for ROM hacks and that's typically because they aren't labelled the best or I want to clump them together (ex. Pokemon ROM hacks).
I feel like there's too many overlaps in genres to organize it that way but that's just me.