It is possible to move a branch or folder in TFS - instead of copying the folder manually in the filesystem. The benefit of using TFS to move a folder is that it preserves the full history (and the parent/child relationship if its a branch) when merging.
Right-click on the folder to be moved and select 'Move...'
A dialog box appears letting you enter (or select) the new path and foldername.
Done. It's that easy - and the history is preserved.