How do you label folders in the photo app?

I don't think there is a way to do that on the iPad without an app or jailbreaking and using PhotoAlbums+ from Cydia.

First, you should save everything in your Camera Roll/Photos to iTunes, then remove the pictures currently in the Camera Roll (Photos), so you won't be duplicating everything. You can do this by un-checking "Sync Photos from..." and syncing, this will delete all of the photos on the iPad

You need to setup a folder, on your PC under "My Pictures", such as "iPad Pictures" and make all of the folders you want, with the pictures you want in them (copy, move or drag and drop, your choice), under that folder. Then go into iTunes, under PHOTOS and select "Sync Photos from" and change "My Pictures" to "Choose Folder" and then choose the folder you created "iPad Pictures" open it and select the folders you want to sync to the iPad. Then sync them.