Wi-Fi sync setup and up-to-date.
Created new folders, moved objects into the folders. Went through the sync process. Folders showed, but contents did not. Perhaps sync routine only detects newly-created or never-synced objects in folders?
Version 4.0b73 (400173) on OS X
4.3b5 on iOS 6 (latest) on my iPhone
On the Mac, I have Folders and Subfolders with items in them. On the iPhone, when I go to "Folders", all I see are my top-level folders and they are all empty. However, if I browse to a login that is in a folder (well, supposed to) and click "remove from folder" on that login, 1P on iOS shows what empty folder I have to remove it from, so it definitely knows that this login belongs in that folder.
Let me know if you need more information.
I had the same issue ( http://discussions.agilebits.com/discussion/15278/folders-only-working-one-way#latest ) - I can confirm with the latest iOS beta and the latest 4.0 stable on Mac, folders now work great.
I can confirm the latest iOS beta + redoing the sync from 4.x stable on OS X resolved this.
So sorry about this. As soon as you do something like creating a new subfolder in one of the parent folders, the view should refresh and show everything. This is a known issue, and we're working to resolve it.