Hi Folks -- I just happened onto this site and got involved in reading the forum comments. You're an interesting bunch, and I hope to come back some time, and perhaps lose my "guest" status. I am a lifelong musician, and a lover and performer of many traditional forms of music. You are discussing my life, and my calling; I am grateful to have found you.
It seems to me that a lot of people are considering "folk" or "traditional" music to necessarily mean "archaic" music -- assuming that a song can only make its way into one or both of those hallowed categories by being anachronistic. Hence the attention to work songs and sea chanteys as examples of "real" folk/traditional music, and references to more introspective singer/songwriter musings as somehow not meriting inclusion in these categories, now or in the future. If that is your definition, I would maintain that folk/traditional music will gradually wither and die. Sure, there will still be people who study it, much as people study musty old artifacts in museums; but there will be little to keep it vital.
I believe that a better, and more rewarding, approach is to define "folk" and "traditional" music broadly, and to recognize that we cannot expect music to remain frozen in time while the rest of the world moves forward. Work songs and sea chanteys reflected the reality of the times, and the needs and aspirations of the people that lived in those times; today's folk music should do no less. If the ambient noise level produced by our modern world and mass culture creates a need for more solitude and introspection, then that is what will be reflected in the folk music of today. And if the insights and emotions expressed in today's folk music are universal enough that they will still have relevance to the world of tomorrow, then today's "folk" music will become tomorrow's "traditional" music. That is how it worked in the past, and how I believe it will work in the future.
Let's not kill the thing we love with definitions that are too restrictive or scholarship that is too pedantic. There is room for a lot of variety and diversity under the "traditional" music umbrella, and I for one am glad of it.