Took me a while to figure this out, but as of Jun 15, 2014, here’s how you do it:

to re-order images in Photos for iPad/iPhone: (scroll down if this doesn’t work on your iPhone)

open an album in the Photos app.
click select
select the images you want (blue checkmark)
click add to
create new album
open that album
select
press and hold until the image icon “balloons up”
keep holding and drag to rearrange
wash, rinse, repeat.
click done

IPhone #2

The above may work for you on your iPhone, if not then try this:

to re-order images in Photos for iPhone:

open an album in the Photos app.
click select
select the images you want (blue checkmark)
click add to
create new album
open that album
select
press and hold until the copy/paste balloon pops up, and choose “copy”
Then click on the destination, by clicking on the image you want the copied image to be pasted in front of, and select paste.
Your copied image will be moved to the left/before the destination image.
(“Copy” is a misnomer here, since it doesn’t leave the original in place, but in fact moves it.)
wash, rinse, repeat.
click done