If I drag another icon into the icon on the right (remote app for example), then the icon inside the folder becomes a nested folder. The icon outside of the folder remains.
Have you tried a hard reboot by holding the power and home button at the same time? This happens every now and then with me and doing a hard reboot clears it.
Yes this has happened to me with newsstand, on 7.0.4
I also had an empty spot taking up icon space, like an invisible icon. I restored to get rid of it. Since you haven't jailbroken your phone, restoring seems like the easiest solution.