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Tap the button a the top of the bookshelf where it likely says "Books" (though it might say "PDFs") -- this is the Collections button.
Tap "New" to add a new collections folder with a name of your choice.
Tap the "Books" collection and you'll see all of your books.
Tap the "Edit" button in the upper-left corner, then tap on all of the books you want to move into a collection.
Tap "Move" and select the collection you want to move the books into.
In Pages Document View (where you see thumbnails of each document) tap on a document and drag it over another document to create a folder. Additional documents can then be dragged into the folder. To remove a document in a folder, tap, hold then drag out of the folder.
There are limits: each folder can only hold 20 documents and you cannot nest folders or place a folder inside another folder.