The scripts folder is a holdover from NT4 days -- it's the NETLOGON share, where logon scripts were stored, once upon a time. In Active Directory, this folder can be found at \\{domain}\sysvol\{domain}\scripts), or \\{domain}\scripts.
The issue is that DFS (and therefore the SYSVOL share, which is just a glorified DFS share) doesn't come online until AFTER the software installation (and startup script) portion of the GPO executes. And since DCs always point locally for SYSVOL data, if you try to be clever & create a top-level folder for software binaries directly under SYSVOL, the software installation will fail with a Software Installation error 103 (in the Application log) "No package in the software installation data in the Active Directory meets this criteria."
Because the scripts folder is available prior to DFS and SYSVOL, both startup scripts and software pushed from this location via GPO will install correctly.

May 22, 2009 - 6:03pm
As a sidebar note, it also turns out that the same error message ("No package in the software installation data in the Active Directory meets this criteria") also shows up if you try to add a software package to a corrupt GPO. The added package initially does not appear, but will eventually show up after an F5 refresh or after exiting/re-editing the GPO -- however the package will never install on client machines. The only cure here that I found is to recreate the GPO from scratch; even exporting and importing settings into a new GPO does not work. Continued kudos for Microsoft's informative and useful error messages!