Up until today Web Mail had a limit of 40 folders, counting the default folders plus any you created yourself.
Many users asked for the ability to create more, so after looking into this I was able to get this increased to 200. That should be sufficient to satisfy just about all users. The change was made this evening and is in effect now for all mailboxes.
If you have never created a new folder in Web Mail, to do so you simply click the link to Folders on the left side of Web Mail.
This will take you to the Folders page where you can create new folders, delete the contents of any folder with a single click, and delete or rename any folders you created. If you use up the 200 allowed folders, the button at the bottom of the page to "Create Folder" will disappear until you delete a folder to bring you back under the limit.