What is the purpose of VPN on this phone if there is no Folder browsing?
On my old phone (t-mobile dash) I could connect to my work VPN and browse the folders on our work network/copy files to the phone/etc... that's the whole purpose of a VPN isn't it?

On the iPhone I really don't get what it's supposed to do.... what am I missing?

A VPN in and of itself has nothing to do with browsing folders. It's just a way to create an encrypted connection to another network. For example, many corporate intranet only function if you're on their private network. A VPN creates a tunnel from your device to a VPN server, and gives you a route to that private network.

the issue with the VPN on the iphone is that it doesn't allow you to enter in a non-numeric password if you go to Settings -> VPN (On). If you go to Settings -> General -> Network -> Settings then enter in your password, it'll connect with a non-numeric password

I think the purpose of the iphone VPN would be for things like accessing web-based server administration pages that are only accessible via your company network

I attended a college that was all Apple. They were one of the early wireless adopters and they used VPN just to connect. In other words, one could wirelessly get an IP address; however they had no internet/intranet connectivity until they were linked to the network via a VPN client. This VPN client is now built into the phone.