This is indeed very clunky. You seem to be allergic to variables, they're useful for storing information from one line to the next :)
while true
newfolder = input('Enter new folder name: ', 's');
[status, message] = mkdir(newfolder);
if ~status
sprintf('Failed to create folder because %s\n', message);
else
break; %get out of while loop
end
end
addpath(fullfile(pwd, newfolder)); %current folder is returned by pwd. Combined with newfolder gives full path.
Also note that I've added some error handling code, which you should always have when handling user input and / or filesystem. The user may enter invalid name, the folder may not be created due to permission, etc. It's always better to detect this than continue on your merry way.
