I would keep the classical until I ran into something I couldn't play with it. They have plenty of volume and projection. The bass strings sound much richer becasuse there are less high harmonics.

Although you can't get your thumb around a 2" neck, it is much easier to make barre chords with nylon strings.

You can play a lot of Mississippi John Hurt pieces with a classical. You can play a lot of Mance Lipscomb; but you will run into trouble when you try a Rev. Gary Davis piece in C. He often keeps the treble E string open and often does a hammer on on the third string. I can't see how to do that with a barre chord.

A number of country and western players use(d) classical guitars (with pickups). I think Chet Atkins did at one time.

As Don hinted. A number of 60s folk singers used classical guitar. You can certainly go through Happy Traum's "Pattern Picking" course with a classical guitar and having done that you can make effective accompanyment to a large selection of folk songs.

I peronally have one of each. I like to use open tuning and the nylon strings don't permit that. You can use dropped D on a classical and that D really sounds rich. Actually, I now have a third guitar. A LaPatrie. This is essentially a classical guitar; but it has a lower profile and slightly narrower neck. I can just get my thumb around to finger the bass E string and so play things a number of blues pieces, including Gary Davis pieces. For a while my classical and steel string sat in a corner while I played the LaPatrie exclusively. Eventually I got to miss open tuning and the steel string gets used again. So does the classical for classical music.

Murray