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If I delete entire cache from admin->caching, I still see below folders on server in cache dir. Is this expected?

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Yes that's intentional. Folders don't take up much space on their own, only a few bytes, and at most there will only ever be 4096 directories. Also those folders will get reused again as soon as visitors come to a page.

I will also mention here that if you use the Memcached driver, when you clear the cache Memcached still says it has things in the cache, so the stats on the Admin>Cache page may not be correct. (Technically Memcached doesn't actually delete items, it just marks them as expired.)
Ok, thanks. above issue is seen for filesystem.

btw, what is diff between Filesystem and Memcached? which cache is better?
Memcached is an in-memory cache. It will be much faster than the Filesystem cache, but it's more difficult to set up (it requires installing the Memcached server and the PHP extension for it).
Ok, got it. have you tested this on functionality?

when I get time, will install memcached server and test.
Yes I've tested this myself while developing, and will soon test on my live site.
great! thanks for the update.