You can use folders to organize the apps on your iPhone Home screens. You can also rearrange folders, just like you do apps, by dragging them around your Home screens or to the Dock.
This tutorial works on iPhone 3GS, iPhone 4, iPhone 4S, and iPhone 5.
How To Create, Remove, Rename Folder On iPhone
To create a folder Touch an app until the Home screen icons begin to jiggle, then drag the app onto another. Now a new folder will be created that includes the two apps, and
To open a folder just Tap the folder and to close a folder, tap outside the folder, or press the Home button.
If you want to add more apps to the folder then you just need to drag the apps to this folder. The apps that you drag on the folder will be included in the folder.
To remove an app from a folder you just need to open the folder and then drag the app out.
If you do not want to keep the folder anymore then you can delete it. You need to move all apps out of the folder and the folder will be automatically deleted.
iPhone automatically names the folder based on the type of apps. To rename any folder just Tap to open the folder, then tap the name and enter a new one.