So this is a nuisance for quite a while, when you open the Downloads folder on Windows 7 it takes a long time before the contents is displayed. It keeps taking longer and longer when there are more and more items there.
Apparently this is because the folder is optimized for Pictures. You can change this setting by right clicking the Downloads folder and choose properties. Then select the tab “Custimize” and look at the setting “Optimize this folder for:”
The folder contents is instantanious when you change that to “General Items”.