Well...I'm not sure renaming some of them is such a good idea....
Someone here who's actually a half decent *nix hacker can probably explain this way better than me - but what you want to do is try to only use your 'home' folders. That way you'll find you'll have few hassles transferring or backing up your personal settings & info.
If you're used to windows, think of it like the windows directory, the system directory, the root directory, & your user directory. Some files need to live in the system directory, some in the windows directory, and most of the ones you use will be in your user folders. So, no - you don't really need that documents folder on the HD. You'll probably find that some app has installed an install log or something in there.
Use the one in your home directory generally - however if you have more than 1 user on your computer you'll start to see the benifit of having *some* things not in your Home folder (i.e. other people will be able to use/see them).
The library is slightly different - the library in your Home folder can be used to modify or overwrite other system settings, and stores things like your keychain, etc. It also stores all sorts of unix goodies like your preferences (hidden from normal view...you can see them all if you go in through the terminal) - so don't get any funny ideas about trying to rename it!