It's not clear what your local bar is but if it's not a regular folk venue, I would suggest it is best avoided. Also, I would suggest that a venue that works informally is rather easier than a something like a singers night in a folk club where people typically get up in front of a mic to sing as you do tend to feel that little bit (sometimes a lot) more exposed when on stage.

As others have said, pick something you are familiar with and feel comfortable with but don't be surprised if the odd mistake occurs. Where I seem to disagree with many comments above is the value of knowing a song backwards. This is just my experience but I find that if a song is going to go wrong, it will do - even if its something like the Wild Rover that I've done thousands of times.

What I've found most valuable is learning the ability to recover when things do go wrong and I would put this down far more to experience than how well I know a song - something like singing "I've forgotten the bloody words" while keeping the tune going often gives me time enough to think and get back to the song...

One thing with the folk tpye situations is they are usually very friendly and helpful. I'd bet loads of us have been rescued by prompts for words from others...

Jon