When you have lots of objects (more than fit nicely on the object menu), you can group objects together in "menu folders". I find it easier to find objects and it tidies up the object drop down.
Within Object-->Properties you can create a new menu folder by selecting new from the drop down list of folders. Then the new folder will appear in the dropdown list and can be selected in object properties.
I don't think you can delete a menu folder, I've never needed to. The folders are not replicated in scene mode when you go to Build-->Add object, not an issue for me but perhaps a nice to have.