Storing photos on the ipod in album manner is a good idea. It helps you in storing the photographs in a sorted manner, and it also looks good. Though iTunes provides a way to do this, a simpler method to have the album look is described below.
Select the folder from which you want to sync the photographs to the ipod.
For example: let the folder location be described as D:pics.
Now, create new folder under this folder, and rename them to the names of the albums.
For example: D:picsalbum 1
D:picsalbum 2
D:picsalbum 3
Now, paste the respective photos in the album folder, and press sync.
You will get the photographs in the album form.
