This is an interesting problem.
I would bite the bullet and encrypt the whole drive. The security challenges associated with removing
clear text from conventional magnetic media are
nothing compared to what it takes to remove it from modern USB flash drives.
AFAIK
Wear Leveling schemes are built into
all of these drives and have the effect of scattering your data
and any attempted overwrites all over the drive. Conventional data wiping programs like Eraser will be fooled into wiping clean areas of the flash drive by the
Wear Leveling. Locking a folder would seem to be of limited value when the data in a
deleted file can bounce around in a multi GB drive almost indefinitely. Of course,
file slacks will continue to pose problems involving the secure deletion on flash media just as they always have on magnetic media. There is also the problem of the rate of bad sectors, which show up at a higher rate on flash drives than on magnetic media. Data may still often be read from bad flash media that may no longer be written to.
I'm only aware of two ways of even
having a chance of securely deleting data on a flash drive. The first would be to delete the file(s) and then use a utility like
dd to write a pseudo-random string as one big file that fills up the whole drive. There will be nearly no slack space and the deleted data will have the highest probability of being overwritten. Then just delete that big file.
The other method is cleaner, much faster and easier on the flash drive. Encrypt the whole drive with transparent,
on the fly encryption like TrueCrypt or DriveCrypt. The data will never be written to the drive in clear text in the first place, the Wear Leveling won't make it any easier for your attacker after deletion as the data, slack space and unused space all look pretty random. Any bad sectors will just look like noise, also.
It's still kind of a crap shoot. Kingston, one of my two favorite memory companies, is just now
recalling their prestigious Data Traveler line of flash drives because it took them a while to figure out that they were not, in fact, secure. This is a complicated issue.
The safest course is to encrypt the entire drive.