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You can easily with the Kindle for PC application. The only downside is you can only move one book at a time and into one collection at a time (unless I'm missing something). It even worked for some (but not all) of my non-Amazon-bought books (I haven't messed with it enough to figure out why it was working for some but not others).
Once you have your books sorted into collections on the PC application (if you already started sorting your books on your Kindle, you can import your collection into the PC application), go to the "cloud" library on your Kindle Paperwhite. Then open up settings and select "import collections" or something like that. It will then organize every book currently on your Kindle Paperwhite into the collections you set up on your PC (or whatever other source you tell it to use for the imported collections).
Again, this is most effective with Amazon bought ebooks, but might work as well for non-Amazon ebooks as well.
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