I think most of the 'Popularity' of folk music in past decades was weighted most heavily on a very few acts who had channeled their own interest in the larger history of folk music into their work. As an example I would cite the Nitty Gritty Dirt Band's landmark "Will the Circle Be Unbroken" album. I suggest that in a representative poll in which you asked people if they had heard of the Nitty Gritty Dirt Band, many would say yes.

However, far fewer would have heard of

Doc Watson, Merle Travis or Jimmy Driftwood

and even fewer would know the names of

Maybelle Carter Vassar Clements Roy Acuff Jimmy Martin Junior Huskey Uncle Dave Macon etc.

Similarly, a lot more recognize Richie Havens than Jean Ritchie.

So I don't think the popularity of "folk" has waned.

In fact, with all the re-releases and boxed sets being sold in CD format, it is probably easier to get hold of (and more people are buying) recordings of, say, the Memphis Jug Band now than back in the 1960's.

Forums like this and rec.music.folk are still thriving.

A surf over to the Dirty Linen festival listing shows that there are many long-lived folk festivals still running.

And musicians are still being transformed by the old sounds.

(BTW. Did anyone see the CBS Sunday Morning piece on the Anthology of American Folk Music?)

Trust me. This music is still alive.