virtualbox.org

My main concern right now about VB is that it is harder to manage VMs as files kinda get thrown all over the place and they are not portable from system to system. I read in another thread that in 2.2.2 this has been fixed. I'm just wondering how the new file structure is in 2.2.2 and what is the best path to take to upgrade from 2.1.2 to 2.2.2 to get the file structure fixed.

My suggestion for you would be to un-install the 2.1.4 version before you try to upgrade to 2.2.2.
You can upgrade direct but I would also suggest that if you do you go in steps. and not to skip any of the versions.
As with any upgrade there are risks so at the very least you should backup your *.xml files to a different location.
Also I have seen problems with snapshots so if you can try to merge them before you upgrade.
And this is a BIG one, DO NOT leave any of the systems you have in a saved state. Make sure they are all powered off before you upgrade.

Pretty much standard things when updating. But once you do and get it working you will be happier with what you have. IMHO.

For upgrading minor versions, just installing the new one is no issue.
When upgrading to a new major version, you need to remove the previous version first. So uninstall 2.1, best to purge it's config too (your VMs will be kept) and then install 2.2.
Upgrading from this 'big' change is no problem. People have been upgrading from 2.0 to 2.2 directly without issues before. Just make sure you remove the previous version first when upgrading to a new major version.

Sounds fairly easy.

Now about the new file structure, how does it work, is it in fact all housed in a single folder now? If yes what changes do I need to do to my VMs to support this new format?

You don't need to change your VM config. The base is still ~/.VirtualBox/VirtualBox.xml. That has the location of your VMs, so even if you would put them all in one folder with a subfolder for each VM config, or separate folders for config and hard drive files, it doesn't matter.