1. First, in order to create App folders you need to be sure your iPad or iPhone is updated to iPhone OS 4.0 or later.

2. Next, press your finger on an App and hold until the App icons start to shake. This is the same process (up to this point) that you would do in order to rearrange Apps

3. Next, drag one App on top of another to create a new folder containing both those Apps. A new folder icon will appear when you do this.

4. Continue to drag and drop more App icons to that folder if you wish to add them to that particular folder. That's all there is to it.

Folders will automatically be named based on the App Store category the included Apps are from. The folders can also be renamed to something more descriptive.