One of the seven major new features announced today for the upcoming version of the iPhone operating system was the ability to organize home screen icons into folders, something many iPhone users have ardently wished for in the past.

At a press conference to announce new features in iPhone OS 4.0 today, Apple CEO Steve Jobs talked about how many users were tired of flipping through page after page of icons on their home screen to find the app they wanted. Apple wanted to find a solution for that kind of icon clutter.

"Folders fit the bill," Jobs said.

Now icons can be grouped into folders by tapping and holding one icon until it jiggles. Dragging that icon over another will instantly form a folder with those two icons inside. Then the user can simply drag other app icons into the folder.

The folder icon sits on the home screen and can be moved around or even put in the main dock at the bottom of the screen. Clicking the folder icon opens it up to reveal the apps inside.

The iPhone automatically detects the categories the apps come from and names the folder for whatever similarities they have. For instance, Jobs demoed the feature by dragging two app icons together, at which point the iPhone merged them into a folder called "Games." Users can also rename the folders if they don't like the automatically generated name.

Jobs pointed out that adding folders also increased the number of apps the iPhone can handle.

"You used to be able to see 180 apps on your phone, now it's over 2000," he said.

And because the iPad and iPod Touch uses essentially the same operating system as the iPhone, they will benefit from the new operating system upgrades.

Jobs said iPhone 4.0 will be released for iPhones and iPod Touches beginning this Summer, while the iPad version will be released sometime this Fall.

Other major improvements announced at the press conference included multitasking for iPhone apps, a Game Center social gaming network and interactive advertising.