I'm afraid I've converted my folder to group, still cannot manually sort the files. I've converted it back to a folder, still cannot manually sort the files. This is a really strange change to Xcode.

Worked for me exactly as I was hoping. I had a version 3.1 started, but soon decided that I wanted a major revision and was going to skip right to 4.0. All I had to do was change the version number from 3.1 to 4.0 and carry on as if I'd never created a version 3.1.