Christina ---
Personally I would keep the by type sections because it does help with SEO and most people shop that way. But what I would do instead is make sure all my titles have the collection name in it (don't have to use the word collection, maybe just at the end of the title you put "- Neon" or something) or you can have it as one tag, then in each listing at the end of the listing, I would put a link to a search within your shop for the collection and say something like this:
More items in the Zest Collection:
http://www.etsy.com/shop/VeniciaCreations/search?search_query=zestRight now no one could search by collection in your shop because you don't have the words in your title or tags. But if you did it this way, buyers could find the whole collection right from the listing which would actually be more helpful because the majority of people who come to your store, never even see your main shop page. They come in through one listing and leave from that listing. When I added backlinks, like I am talking about for you, to my listings, my views tripled which meant people were staying and looking around my shop more. It would be a shame to lose good SEO from your categories just for the convenience of maybe 10% of your shoppers. If you do decide to do this, just remember it takes about 24 hours for a new word to show up in your shop search so the items with the new word won't show right away when you do the search for them.
Also if you are going to add backlinks to collections in your listings, you should also add a backlink to your shop at the very end as well. So the last thing in your listing would be:
More items in the zest collection:
http://www.etsy.com/shop/VeniciaCreations/search?search_query=zestBack to main shop:
http://www.etsy.com/shop/VeniciaCreationsGood luck!
Rachel