Upgrading my iPad 1 to iOS 5.0.1 did the trick. The program still dumps all photos in the "Saved" photos album, but it also puts them in the individual albums that I create. I did find that you have to do two steps. First, create the album. Once that is done, the default in the "Download to" window will be your new album. Then when you transfer your photos they go to the correct album.