Car free since 1995
Join Date: Sep 2006
Bikes: Birdy Yellow, Birdy Monocoque
Depends on how small your folder is, but I just use a slip cover. Both Dahon and Birdy make great ones for abou $20 that fit most 16"-20" folders. I have gotten into:
-Private black tie university functions
-Designer furniture stores
As of yet (fingers crossed), I have not been turned away. I've even managed to do some of these things with my girlfriend's rather bulky Downtube.
As for the other answer to your question, never lock your bike with anything but a New York Kryptonite. Anywhere. Also, use a good second cable to lock your unlocked bits and always take your seat with you. (Of course, if you can take your seat, you can take the whole bike!)