[Brian]

Sorry for the trouble this is causing, pmagnifico! I just handled a support message from a customer who determined what's going on here - apparently, in iOS 4.3, if you tap the "move item" button (looks like a folder) and then cancel the move, it causes the issue you're reporting.

I filed a bug on this earlier today - will attach your forum post so the rest of the team knows you encountered this as well. Apologies!