Simply follow these steps:
- Take two apps and go to create a folder
- The second the apps are in the folder and it’s doing the folder creation animation, drag Newsstand into the folder
- As long as you’re quick enough Newsstand will go into the folder!
If you open Newsstand while it’s in a folder your springboard will crash. If you want to use Newsstand at some point just take it out of the folder and you’re good to go!
As John Gruber mentions, it’s clearly a bug so this little hack-fix may not work when the next update comes. Either way, it’s brilliant. Newsstand was driving me crazy. I’m pretty obsessive about keeping my iPhone apps organized; I only have one homescreen.