Of course there are zillions. A quick search of CDs near the surface of the pile near my desk reveals the following (none of which are 'traditional' or even 'folk,' but then neither is that gin-soaked barroom queen you mentioned)
Memphis mentioned in lyrics:
From Galway to Graceland by Richard Thompson You Took My Joy by Lucinda Williams on Car Wheels on a Gravel Road (does West Memphis count?) Love in a Memory by Nanci Griffith on Lone Star State of Mind Graceland (duh) by Paul Simon
Memphis is implied but not mentioned by name in Elvis' Rolls Royce by Was (not Was) on Are You Okay?
I'm sure there's more across the room but I'll be up all night if I start looking.
Nora