You're all over-exaggerating. Yes a lot of people call themselves "nu-folk" and they are just bad songwriters with ukeleles and toy xylophones, and it annoys the hell out of most people, and they disappear pretty quickly. But there are some genuine young songwriters out there who ARE nu-folk and do go down well at Folk festivals as well as indie gigs etc - for example, a band called Feldspar who I believe are from the Leeds / Manchester area. Although not traditional "folk", there are the roots of folk there - solid, genuine story telling, quality songwriting where the importance is placed on the song itself rather than the arrangement or just the noise made, and a connection with people, along with singing and instrumental talent.

I've seen Feldspar at numerous real folk festivals and the audiences love them.

Laura Marling is another fine example, writing excellent songs which stand on their own as well as in highly produced environments.

Most nu-folk are idiots writing quirky songs with novelty arrangements - but not all of them are so.