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Collection is not folder it is just the file that is created in the bridge preferences to ease out the navigation for the user.
Go to C:\Users\<user name>\AppData\Roaming\Adobe\Bridge CS5\Collections
you will find the filelist files ther with the name of your collection, if you open those file in the wordpard you will see the path of the files included in the collection.
hence I dont think the nested collection could be created becuase we cannot refer the filelist file in another filelist file.
Thank you. I was afraid of that. I was hoping that I could do Collection Sets like in Lightroom.
Done. Thank you for your help. I appreciate it.