Subtle modulations may not be especially common in Folk Music, but they have been used effectively on occasions.

Ian and Sylvia go back and forth between the keys of C and G in their classic version of "Captain Woodstock's Courtship", a guitar run hear and there helps obscure the change.

I assume that Sylvia's voice was best in another key than Ian's when she sang lead rather than her usual harmony parts.

Bill Clifton used subtle modulation once in a while. His version of "Blue Ridge Mountain Blues" (done years befor Doc Watson's) has a key change which has him playing a guitar break in a different key than the rest of the song.

Both Country and Pop songs tend to use an abrupt modulation such as singing the song through the first time in one key and immediatly doing it again one whole step higher.