Index: source/blender/editors/space_file/file_ops.c
===================================================================
--- source/blender/editors/space_file/file_ops.c	(revision 25136)
+++ source/blender/editors/space_file/file_ops.c	(working copy)
@@ -748,7 +748,7 @@
 int file_directory_new_exec(bContext *C, wmOperator *unused)
 {
 	char tmpstr[FILE_MAX];
-	char tmpdir[FILE_MAXFILE];
+	char tmpdir[FILE_MAXFILE] = "New Folder";
 	int i = 1;
 
 	SpaceFile *sfile= CTX_wm_space_file(C);
@@ -756,7 +756,7 @@
 	if(sfile->params) {
 		 
 		BLI_strncpy(tmpstr, sfile->params->dir, FILE_MAX);
-		BLI_join_dirfile(tmpstr, tmpstr, "New Folder");
+		BLI_join_dirfile(tmpstr, tmpstr, tmpdir);
 		while (BLI_exists(tmpstr)) {
 			BLI_snprintf(tmpdir, FILE_MAXFILE, "New Folder(%d)", i++);
 			BLI_strncpy(tmpstr, sfile->params->dir, FILE_MAX);