If you want to preserve the current directory name but not the full path to it, try something like this (executed from within the directory that you want to tar; assumes bash/zsh):
ORIGDIR=${PWD##*/}
tar -C `dirname $PWD` -cvf ../archive.tar $ORIGDIR
Here's some detail; first:
ORIGDIR=${PWD##*/}
.. stores the current directory name (i.e. the name of the directory you're in). Then, in the tar command:
-C `dirname $PWD`
.. switches tar's "working directory" from the standard root ("/") to the parent of the folder you want to archive. Strangely the -C switch only affects the path for building the archive, but not the location the archive itself will be stored in. Hence you'll still have to prefix the archive name with "../", or else tar will place it within the folder you started the command in. Finally, $ORIGDIR is relative to the parent directory, and so it and its contents are archived recursively into the tar (but without the path leading to it).