Is there a way to simply create folders in umbraco 4 for the purpose of organizing content? I've searched forums and did not find a reasonable answer.
This is an area where the documentation is somewhat lacking, however it is perfectly doable:
Create a document type called something like "Content Folder". (You can't use Folder as it's already in use in the system).
Give the new doc type the following property:
Name: Redirect to
Alias: umbracoRedirect
Type: ContentPicker
The important bit there is the Alias: umbracoRedirect. This is one of the undocumented built in umbraco features. It basically redirects one node to another (making it act like a folder).
If you want to hide the folder from the menu then you'll need to add another one of those undocumented properties: umbracoNaviHide, which is used in the default XSLT navigaiton examples.
More info: http://www.umbraco.org/documentation/books/converting-existing-site-to-umbraco/creating-folders