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The Apple devices only use the Drafts folder as local only. It does not coincide with the server's Drafts folder at all. Also, Apple will generally only show the Drafts folder when there is something in it. If there isn't any mail in it, it often does not show in the folder list at all.
Once a Draft is created and you can see the Drafts folder, you should be able to open it and then either Cancel or Send. If you cannot edit it, then something else is weird.
There were some issues with older Apple versions and folders disappearing, so if the device isn't on the 4.2.x OS, you might want to update it and see if that helps as this is all Apple controlled on the device.
Feedback response number RSSN8CUNRQ created by ~Michelle Umapuloni on 01/06/2011