I sing few traditional songs, but I don't see why the question wouldn't have the same validity for any "folk" song (using the wide interpretation of the term here, let's not start another horse dialogue).

Generally speaking, a song can benefit from a wide variety of interpretations; but a given singer is only capable of some of them - and perhaps only one to the best of his abilities. So a lot of the time you get the "slow evolution towards a final personal interpretation" effect that Keith described above. And if the singer is not a regular performer of that song, that's where it stays. So, uncle Bert's version of "Dido, Bendigo" is great, he does actions with it too, and every time he sings it doen the pub - 4 or 5 times a year - it's the same.

A regular performer, if he/she has any nerves at all, will tire of the same interpretation though. I find myself tiring of the way I sing certain of my songs that have become "standards" at my gigs, and despite the fact that I have honed the interpretations to as fine a point as is possible for me, eventually I feel the urge to vary those interpretations. The variations may not be great - a slight tempo change, occasionally a pitch change, very occasionally the style.

But all the time there is a dilemma: I owe it to the audience to give the best I can; so, do I use the tried-and-trusted version, or do I "play" with the song a bit? And also, I owe it to give variety, especially for those who have seen me before (or at least recently): Do I give them same-old-same-old, or do I give them change?

The answer varies depending on venue, audience, which side of the bed I got out that morning, time of the month etc. And I never know myself until it comes to singing the song; I just react to the atmosphere.