Huh. That's weird.
Have you tried to fully close the app, then restart or reset the iPad? To do (apologies if you know):
Fully Close an App: Double tap the Home button (or do a 4-finger swipe up) to reveal a row of icons and cards in the multi-tasking viewer. Swipe up on all the cards until they are all gone.
Then...
Restart: Hold down the power button until the power off slider appears. Slide it off. When the iPad finishes shutting down, wait a bit, then hold down the power button again until the Apple logo appears.
If that doesn't help, try this last step...
Reset: Hold both the power and home buttons until the screen goes dark and the Apple logo appears. Once the logo appears, release the buttons. After a time, your homescreen will appear. Please note that it may take some time for the Apple logo to appear or for your homescreen to appear (or both). This is normal. Eventually, the homescreen will appear.
Hopefully, that'll help. If not, c an you post a screenshot of what you see when you go to enter a new folder? Because I tried it and I could not duplicate your issue. I tapped folder and got this popup:
The keyboard came up and it worked right away for me to put in the name...
Marilyn