Newsstand acts like a folder, thus cannot be hidden inside a folder or hidden with poof or any Cydia app making use of libhide.
To remove it, you have two options. Edit a plist document to hide it, or remove it from /applications.
Workaround:
Using a plist editor locate and open the file: /var/mobile/Library/Springboard/IconState.plist
Find an entry that looks like this:
Code:
<dict> <key>displayname</key> <string>Newsstand</string> <key>iconLists</key> <array/>
<key>listType</key> <string>newsstand</string> </dict>
Select that code, cut it and paste it into a folder array. Should look like this.
Code:
<dict> <key>displayname</key> <string>Literature</string> <key>iconLists</key>
<array> <array> <dict> <key>displayname</key> <string>Newsstand</string>
<key>iconLists</key> <array/> <key>listType</key> <string>newsstand</string>
</dict> </array> </array> <key>listType</key> <string>folder</string> </dict>
That would produce a folder named ‘Literature’ with just Newsstand in it. Save and respring.
You can change the given text, by changing the line under <key>displayname</key>
