I tested with a couple portlets, and here are the results when I selected "Delete from portlet before importing" when Publishing to Live. In both tests, I created a folder and created an entry inside the folder. I also created an entry that belonged to no folder.
Deleted my folders and links within the folder in staging and live page, but did not delete the link without a folder.
Did not delete my folders or file without a folder in staging.
Deleted the folder in live, but did not delete the file without a folder.
I suspect that the behaviors may be different depending on each portlet. What should the expected behavior be, and should they be consistent across all portlets?