danardh,
You may wonder why there are ways to password protect files but not folders. Simply put, each "file" in iOS is under the control of a particular app and Apple does not provide a means to password protect individual apps they supply or the folders that the OS manages. Short of jailbreaking the iPad (which is not possible at the present time with any iOS version past 4.3.3) there is no way to access a common file system on the iPad. This means, for example, that if you have a photo in the Camera Roll folder (which cannot be password protected) and you save the same photo with an app like Safe or Goodreader there are actually two copies of that photo on your iPad. If you delete one copy in say, Camera, it remains in Goodreader.
If you want to password protect a particular file or group of files, choose an app that has that capability and make sure there are no other copies of the same file elsewhere on your iPad.