"I'm extremely disappointed in the stance (Folau) has taken," Phipps told Channel Nine after the latest loss to the Brumbies.
"…but it's obviously something that's very important to him and I can't speak for the rest of the group. But there's a lot of players disappointed in the way it's all gone down.
"It's something that's distracted us from our goal this year to be making finals and it's disappointing that I'm watching the game that I love be picked apart for the last eight months.
"There's so many good stories out there about rugby union and we're not getting to talk about them."
Phipps was clearly upset in the way Folau decided to reflect his views.
"He can have those views, that's fine, everyone's allowed to have their own opinions," Phipps said.
"It's not something that the majority of us share but the way that it came out and the way that it's happened twice now is disappointing.
"We wanted to be making finals at the Waratahs this year and we haven't really been given that opportunity to make it."
Phipps said Folau's team mates were left on "trial".
"The players that haven't been involved in this are still so on trial. There's no right side to be sitting on, apparently, everyone's got an opinion about it," he said.
"There are players very close to Izzy who are very Christian as well and that's tough for them to understand and it's tough for us as well.
"When you're on the road doing battle every week, it's a very tight-knit group and then when one of your own - who you love and respect, every single day train with, work hard with – (does this), it's very distracting and sad."
Folau made his second infamous "go to hell" Instagram post during a bye week, having just become Super Rugby all-time leading try scorer.
The Waratahs lost five of the following eight games, but hooker Damian Fitzpatrick said he did not want to use Folau as an excuse.
"It's been pretty glaring that there's been some stuff going on in our team but full credit to our guys and the resilience they've shown in really trying to stick to the job week to week," Fitzpatrick said.
"I don't want to use that as an excuse because I feel we've prepared well, had game plans specifically prepared for the teams we were playing."
The 30-year-old Phipps, a Waratah since 2014, has played 70 tests. He will join London-Irish after the World Cup.
