Here's what i'm thinking:

Select a folder context menu includes:
1. create folder (creates new folder in the selected folder)
2. create bookmark (creates new bookmark in the selected folder)
3. Move up 
4. Move down
5. add separator (adds a seperator in the selected folder)
6. Delete folder
7. Properties (link to dialog to edit folder properties. i'll open another
bug on this.)

Select an item context menu
1. Move up
2. Move down
3. Fetch Bookmark icon
4. Delete Bookmark
5. Go to bookmark
6. properties (bookmark properites)

note this is just a rough outline....the ordering of the items maybe wrong,
we may want to remove some items. I only included all of them here for the
sake of including all current options. 
example, i think the move up and move down should be done with drag and
drop, but maybe menu items still make sense, i'm not sure.