In the Flash CS5 IDE, select the code to fold and right click. A menu will appear with the following options: Collapse Between Braces | Collapse Selection | Collapse Outside Selection | Expand Selection | Expand All.
In Flash CS3, there was not really anything like that. CS4 introduced conditional compiling, not really what you are looking for; but it does not get any closer.
Like already suggested, I would suggest using FlashDevelop. It has some folding options, but event more importently it has intellisense and automatic code generations. And it is free.