It IS possible to put newsstand in folder!

[UserOfIphone]

Take a look:

http://thecodingmassacre.wordpress.com/2011/10/13/newsstand-folder-no-jailbreak-ios-5/

You don't have to jailbreak... May be a little difficult, but it should work

 

[dukebound85]

and when you open it, crashes springboard...

 

[MacDawg]

See the news thread here