There are several reasons (at least) which occur to me:

1) As Dani pointed out, people into folk music tend to be a tad unconventional; less worried than many about conforming to societies' ideas of how one should look.

2) A lot of folkies' formative years were during the 60s & 70s, when not conforming to society's expectations was "the thing to do" (which begs the question whether or not all us "non-conformists" are actually conforming -- just to a different standard -- but let's not go into that...)

3) Bill D mentions that a lot of men have jobs with written and/or unwritten expectations of a clean-shaven appearance by male employees, but that many male folkies tend to have jobs where this is not so much of an issue. I would guess (though I don't have any facts/figures to back this up) that a majority of folkies are very well educated, which might have something to do with why folkie guys have the kind(s) of jobs that allow a bit more freedom concerning personal appearance.

This discussion reminds me of a story told me by a fellow on the (co-ed) Morris side I used to belong to (Ann Arbor Morris & Sword, in case anyone from A2 is reading this). A reporter from the local paper came out to interview the team for some event. She looked around, evidently noticed all the beards, and asked if a beard was a requirement for being on the Morris team.

"Only for the men," they told her...

Cheers,

YY