I have over 1400 apps. I started to put them into folders. I created about 20 folders that had 20 apps in each. Then I hit the 'APPLY' button. Waited while it did a sync and found my folders are missing. This has happened twice.

I've noticed that iTunes doesn't always handle big changes well. Try creating one folder, and see if it will sync. Than add another. I know it's a pain, but at least if it does not work you only loose a little work.

I'd offer a better idea/solutions, but I'm afraid I don't know of one, nor can I find one on the Apple support site.