Folder is better. On disk, a folder is a list of pairs of a name and number, mapping the items in the folder to their location on the disk i.e. it’s a directory. The days before computerization are before my time, but, as I understand it, library index cards worked this way. You might have a card for each author which listed the books by that author with the location of the index card on that book, and you might have directory cards on subjects or keywords too, and the card on a book might point to the location of the book on the shelf and the card for the author, etc., or something like that. It would be most confusing to call these directory cards “folders”. The computer does the same thing internally, but the user interface has hidden away any notion of directory. They’re logically folders. It’s only a directory if you’re writing a file system implementation.