I think it's useful having a separate category for traditional music, for all the reasons given by Guest above.

Traditional music is a sub-category of folk. People who want to can decide amongst themselves what "folk" means - but at least we know what we mean by the tradition, and there's no need to confuse it with, or set it up in conflict with, all the other subsections of "folk". Folk is a term that has been conveniently co-opted so many times by the media and the marketplace - every time they add another interpretation or brand, the term itelf becomes more meaningless.