DougR is on the right track for the material should be something everyone is very familiar with.I have found that most any Woody Guthrie redendition of This Land is Your Land or Roll On Columbia is a real knee slapper. Sea shanties are great fun but sometimes cumbersome as sing alongs, unless the circle is used to them or know them. There are lots of folks in the NW that do sea shanties, they usaully have familiar tunes and Margarita presents her sea shanties very well.
Your song choice should be something you are comfortable with and half the battle is won. Know your material and the sing along portion should take care of itself, just be sure to invite everyone to join in.
Mj