[bes]

bes,
if (empty($files)) {
        return;
    }
лишнее

согласен

попутно проба пера использования с http://www.jstree.com/

<meta charset="utf-8">
<link rel="stylesheet" href="dist/themes/default/style.min.css" />
<script src="dist/libs/jquery.js"></script>
<script src="dist/jstree.min.js"></script>

<div id="jstree">
<?php
$dir = ".";
function recursive_directory_traversal($dir) {
	echo "<ul>";
	$files = array_diff(scandir($dir), array(".", ".."));
	foreach($files as $value) {
		$path = $dir."/".$value;
		$value = iconv("windows-1251", "utf-8", $value);//
		if (is_dir($path)) {
			echo "<li>".$value;
			recursive_directory_traversal($path);
			echo "</li>";
		} else {
			echo "<li data-jstree='{\"icon\":\"http://jstree.com/tree.png\"}'>".$value."</li>";
		}
	}
	echo "</ul>";
}
recursive_directory_traversal($dir);
?>
</div>
<script>
$(function(){
	$('#jstree').jstree();
});
</script>