Yes, it has folders

.
By default, the Library screen looks identical to that of the Gen3, showing thumbnails of books covers and the book's title, author, date, and size.
Clicking the "menu" button displays:
- 5 items per page
- 10 items per page
- 20 items per page
- Folder View
- Sort
- Filter
- Show File Formats
- Delete
- Advanced...
Selecting "Folder View" gives you a "File System" type view, showing all the folders in the file system. Opening a folder first shows you all the sub-folders, with a ".." item at the top to go up a level, and then the standard thumbnail images of all the books in that folder.
Selecting the "Delete" menu item allows you to delete the currently-selected item, with a "Do you want to delete ..." confirmation.
A nice enhancement.