I can't imagine anyone wanting to hear a folk singer present a piece with "gravitas" and perfect diction, as a television news anchor might - unless for comic effect. That said, sloppy diction, slurs and mumbling can obscure the meaning of a song and set one's teeth on edge. There's a happy medium, I think, where you keep to the flavor, style and language inherent in a folk song while honoring your audience by making it reasonably understandable.