Is it better to have multiple s3 buckets or one bucket with sub folders?

Simpler Permission with Multiple Buckets

If the images are used in different use cases, using multiple buckets will simplify the permissions model, since you can give clients/users bucket level permissions instead of directory level permissions.

2-way doors and migrations

On a similar note, using 2 buckets is more flexible down the road.

1 to 2: If you switch from 1 bucket to 2, you now have to move all clients to the new set-up. You will need to update permissions for all clients, which can require IAM policy changes for both you and the client. Then you can move your clients over by releasing a new client library during the transition period.

2 to 1: If you switch from 2 buckets to 1 bucket, your clients will already have access to the 1 bucket. All you need to do is update the client library and move your clients onto it during the transition period.

*If you don't have a client library than code changes are required in both cases for the clients.

Yes, there is actually a 100 bucket limit per account. I asked the reason for that to an architect in an AWS event. He said this is to avoid people hosting unlimited static websites on S3 as they think this may be abused. But you can apply for an increase.

By default, you can create up to 100 buckets in each of your AWS accounts. If you need additional buckets, you can increase your bucket limit by submitting a service limit increase.

Source: http://docs.aws.amazon.com/AmazonS3/latest/dev/BucketRestrictions.html

Also, please note that there are actually no folders in S3, just a flat file structure:

Amazon S3 has a flat structure with no hierarchy like you would see in a typical file system. However, for the sake of organizational simplicity, the Amazon S3 console supports the folder concept as a means of grouping objects. Amazon S3 does this by using key name prefixes for objects.

Source: http://docs.aws.amazon.com/AmazonS3/latest/UG/FolderOperations.html

Finally, the 5TB limit only applies to a single object. There is no limit on the number of objects or total size of the bucket.

Q: How much data can I store?

The total volume of data and number of objects you can store are unlimited.

Source: https://aws.amazon.com/s3/faqs/

Also the documentation states there is no performance difference between using a single bucket or multiple buckets so I guess both option 1 and 2 would be suitable for you.

Hope this helps.