"Learning to play your instrument well helps in the long run (I remember hearing Steve Knightley saying this - just in case you want another opinion ;0)
If someone is too lazy to learn his instrument well, he should consider singing a-capella, get an accompanist or stick to reciting poetry."

Totally disagree. Being able to play an instrument well is not simply a matter of "learning" and practice. Vocal and instrumental skill are both subject to physical limitations. And what's wrong with simple instrumental backup for a vocalist?
I enjoy an excellent vocal with a rhythm guitar background every much as I do an excellent guitarist with a mediocre voice. :)

As has been said, as a performer you need to size up your audience and what they respond to.

I don't think "playing well" necessarily implies being an instrumental soloist. (And if a song is as long as a lot of folk songs are, I don't need an instrumental break. LOL)

I do agree with the idea of including some familiar songs. Most audiences love that, even from big-name artists or groups.   But I've heard many a group do a set of songs that I myself had never heard before - even if they were old folk songs - and been thoroughly enthralled by the concert! As, apparently, were the rest of the audience.