On his blog Voltage, Max Clarke a.k.a. Maxx Klaxon raises some interesting points about the current folk revival.
As someone who subscribes to ooooo mailing list (the home of Finnish marginal and eclectic music, among all with most of those folk(s) belonging to the "New Weird of Finland" movement lauded in The Wire and international zines) and has followed what people like Kemialliset Ystävät are doing, I find this quite interesting. I might argue that what I find myself attracted to in this sort of music (often called "psychedelic folk" or "New Weird of...") is not the fact that it is created with acoustic instruments but the overall spirit of experimentation that is found there: all those weird sounds and otherworldy ambience. Those are not exactly traditional strumming acoustic guitar by campfire sounds, but something totally creating a world one can call its own. Then, I'm not familiar myself with most of the other artists belonging to this alleged "new folk" genre, e.g. Devandra Banhart, so I can't really comment this style in general.
Musical "fashions" repeat themselves in cycles and have a tendency to reflect the general Zeitgeist: in unsure times people obviously have a need to return to the "roots", to what is "safe", "tried and true". Even then, musical experimentation and seeking for what is "new" is bound to go on somewhere in the margins.
To throw more gasoline in the flames: how much there is that is actually "new" in current electro(nic) music, and how much of that is only recycling what was already done in the 1980s?
Anyway, this seems to me to be another revival of the age-old confrontation between "authentic", "natural", "down-to-Earth" acoustic/rock music and the "artificial", "unnatural", "unauthentic" electronic (dance/listening) music; of which I grew up tired years ago after countless "it is/it isn't" type of arguments which proved totally unfruitful and counterproductive in the end. Doesn't it only boil down to subjective tastes, personal likes and dislikes? An artist tries to make most of those instruments and resources at his/her disposal, whether they were acoustic or electric guitars, violins, flutes, kazoos, washboards, Moog synths, Roland's x0x series, MAX/MSP, empty oil barrels or rubber bands. In the end it's creativity that counts, not the means to reach that end result.