Hello Kev, and welcome to Vista Forums.
Yes, once you delete the old user account from User Accounts, you can safely delete it from C:\Users\(user name). User Account - Delete
The only way to rename the C:\Users\(user name) folder is to create a new user account with a different name than the old one. If you want the same name as the old one, then it will require to create one dummy one to be able to work in, delete the old one, create another new one with the name you wanted, then delete the dummy one.
Hope this helps,