The issue isn't solved with playlists at all. We currently use playlists, rename files or jump through some other hoop, but these are all workarounds. The audiobooks section of iTunes (and iOS devices) should work properly. Period.
The main selling point of these devices is that they are easy and intuitive to use. That I can't go to the section of the software dedicated to audiobooks and play them flawlessly should be a serious issue for a company that has prided themselves on their user interfaces for so long. I understand that they're not led by a passionate visionary engineer anymore. That's no excuse for this nonsense and other issues like it. Put 5 people on the job and give them 30 days to address this stuff and hundreds of issues could be resolved.
The fellow now is a numbers guy, and you see how the stock price has dropped as the competition is doing very well, Apple is dumping resources into boutique retail outlets that probably lose money and the company doesn't seem to be doing anything that's going to be game changing. A flexible screen watch? Everyone is working on flexible screens, and who wears a watch anymore? Where's the next paradigm shift, Apple?