Comment 79 for bug 389176

I think it is best to create a new folder with same name as of archive and decompress the data into that folder on double clicking the archive . Reasons for this :

1.It makes exploring the archive files easier (and more familiar) because now user can access files from within nautilus only.
2.Many times , user wants to view and may be edit the documents inside the archive . If he makes any changes to the file in the archive and saves it , he needs to accept 2 popups for this , one for the file itself and other for the archive manager (whether or not he wants to update the archive) . This behavior may be annoying .

Also a better thing would be to focus the newly created folder after decompression is finished.