ENDTo create a folder of apps you press and hold one of the apps until it starts to wiggle, then drag it over another app you want in the same folder. You will then be prompted to give the folder a name. Hit the main button and you are done.
To get rid of the folder you click on the folder, and drag out the apps from it. Once all apps are out the folder goes bye bye.
Here is a short video of it -
Create Folders and Organize Apps on the iPad - YouTube