The best freeware file explorer I've yet seen (and I've tried all of them, I think) is TotalCommanderCE. Among other very useful features, it offers ZIP/unZIP capability, supporting subfolders and a range of compression levels. No support for encryption/decryption though, nor archive verification. Resco Explorer with ZIP, FTP, and registry plugins, is definitely a more capable program.
http://www.ghisler.com/pocketpc.htm
http://www.resco-net.com/downloads.asp