When renaming a content folder in the workarea, the corresponding library folder is not updated. The reasoning behind this is described below.
When creating a content folder, the folders are generated automatically for Assets, Private Assets, Uploaded Files and Uploaded Images.
In the case of Assets and Private assets, the folders are named using the newly created folder ID starting at the root folder 0. When updating a folder in the workarea to change the title, the assets and private assets folders don't need to be updated since they are referenced by the ID.
For the uploaded images and uploaded files folders, they are given the name of the folder at the time of creation. Because this is done, any links inserted into content will contain the named path to the corresponding folder in the workarea at the time of creation. If this folder was renamed, it would break any existing links associated with content, added to menu's, metadata, or static content. For this reason, the folder name will not change.