How can I organize items in a folder? I created a folder for games on my homescreen. I added many apps to it, but now that I need to scroll I'd like to reorder them. Long pressing on an icon closes the folder (so I can drop the icon on my home screen).

Is it possible? Or do I have to remove and re-add them in order.

I have a stock Motorola XT720 running eclair.
Using nothing but your Android options won't do the job straight forward, you need to install an App to do your folders, there are two applications (amongst others of course); one called App Mate, or AppManager-Organize your apps, both are available at the market, and both will require sometime at first to cache your apps and stuff.
I'm caching my handset right now, and will get back to here with what is what.

[Update]
App Mate is no use for you, on the other hand AppManager is way much better, it can even sort your folder applications according to frequency of use but unfortunately the folders it creates on your home-screen is cropped in a strange way, I guess that will be easy for the developer to fix.