Seeing as NewStand is sort of a folder itself, and you've never been able to stack folders within one another. This is what I feared.
I don't think you can. But you should be able to remove it through the settings app, by setting up a restriction on. I remember doing that with the YouTube app before. I hope that works.
Why can't anyone get it?
Newsstand IS a folder. When have Apple ever let us create folders inside folders? Exactly, never!
Get over it.
Is Newsstand any more a folder than iBooks? Maybe I should ask that the other way. Is iBooks any less a folder than Newsstand? Honestly, I haven't really used Newsstand so I don't know how it works but I assume they are similar.
Edit: After playing with it for a bit, I now see the difference. I'm curious why Apple did it this way. I like the iBooks methods better.
Next update feature: hiding default Apple apps (including Newsstand).
Can NewsStand be put in a folder? For some reason it won't go into any folders.