Dear 100 Hour Board,
Back in the early days of the church (im talking Joseph Smith days) they would pray with left hand at the side, and the right hand up in the air. We can still see remnants of this tradition from the way someone prays when baptizing. The scriptures never say how you should pray except revrently, but there are many refrences to a bowed head, which I would say is the only rule (if you would consider it a rule at all).
And everyone else hit on the fact that we fold our arms the way we do now because as kids in church we bothered people during prayers, and we just carried it to adulthood.