"Folk" is a pretty broad term - it encompasses so much. I consider "traditional" music to be folk music, but also songs that tell a story. Maybe I'm the only one, but I think Tom T. Hall could be considered a folkie, even though he had a whole slew of hits on commercial radio. ("The Homecoming" is one of my favorite songs of his.) He is a master of telling a story in a song, which of course is a folk tradition that probably goes back to the very origins of singing.

"Folk" is also a term that most people understand pretty well.... if you say "folk", they know you're NOT talking about Top 40 anything. They may not understand the intricacies of what "folk" is, but they pretty much know what it AIN'T.

Besides, "folk" lends itself to some good wordplays, i.e., we're just folking around, we're all folked up, folk you, etc. :)