I have a folder in the photo app I created but I can't figure how to delete or it's contents. It doesn't make sense that you would be able to create a folder and not delete it.
Try this. Tap the photo app, tap the folder you created, tap the icon in the upper right that has a arrow pointing right, then tap the particular photo or photos that you want to delete, tap the red delete button in lower right.
To delete photos you have to go to my pictures in your computer and delete the pictures from there then sync your ipod... that's the way i do it
More reviews about iPhone Transfer, which includes the tutorial about How to transfer photos from iPhone to iTunes on PC.
Hope that can help you.