Creating a folder called "Test & Test" and then deleting it results in it not being deleted and the first character of the folder name being removed.
Doing the same with a folder named "test" also doesn't result in it being delete but the first character does not get removed.
Adding some detail...
Running on Linux, PHP 4.03pl1, against a Stalker CommuniGate Pro v3.3 IMAP server.
Accessed via Internet Explorer v5.5.
Running SquirrelMail version 1.0pre1 (cvs), retrieved from CVS yesterday, 12/6.