Create a column for the status of the item. Change the status to "archived" for archived items. Change the default view and all other active views to include only items where status is not equal to "archived". Create another view to show only archived items.

That way, you do not need folders in the list. Folders are not really meant for lists.

Create a column for the status of the item. Change the status to "archived" for archived items. Change the default view and all other active views to include only items where status is not equal to "archived". Create another view to show only archived items.

That way, you do not need folders in the list. Folders are not really meant for lists.

[edit:] for details about handling large lists with SharePoint 2010 see Manage lists and libraries with many items