As pointed out above, there's not been much on an attempt to actually answer the original question, just lots of comparisons between the two.

I suspect part of it is that 'folk' has become a broad church, and there are lots of younger singer songwriters who maybe would not cut it if they hung their hat on a peg labled with another genre, but can get away with selling their wares because it's acoustic and therefor must be folk.

On the side issue of comparison, I noticed Steeleye mentioned earlier, and I'll just repeat a qoute from the late Tim Hart when challenged on that issue. Tim said that at the time the songs were written, they would have either been sung unaccompanied, or if accompanied, would have been accompanied with whatever was available at the time, and in using elecric instruments, Steeleye were doing exactly the same. Flawless logic. As far as I'm concerned.