Yup - Had a huge pile of folders in Exchange account - took ages to scroll to sent items on iphone so I moved the folders to another account to lighten my heavy mailbox. Folders then appeared as "orphaned" on my iphone but not deleted. So I went to the mobileme or dot mac account - which is how the exchange server is linked to the iphone and hit this magical trash button. It worked - and the orphaned folders are now gone. nice.