I think Punkfolkrocker's take is something like this (we're talking UK here, the situation may be different in US:

Youngsters get their music from the mainstream media
Folk music is invisible in the mainstream media.
Some youngsters go to church.
Church music is played on an organ.
Some progressive churches use acoustic guitars etc instead of an organ for their music.
Acoustic guitars are folk instruments
So folk must be connected to religion, not cool.
QED