Argentinean composer Alberto Ginastera (1916-1983) (http://members.tripod.com/~ostinato/ginasbio.html), one of the most respected musicians in South America, many times brought the folk melodies to the symphonic arena. His famous "Malambo" is based on a typical dance of the Pampas. In my humble opinion, the charm of folk melodies and rythms is based just in the concept of "keep it simple". When you replace guitars and drums with a full orchestra repeating an "ostinato" of a simple melody, it becomes boring to say the least. And people who are musically educated may think that our highest inspiration on classical music is to put 100 master musicians to play a folk fragment in all possible volumes and variations of tonality and atonality.Ginastera is also author of many non-folk masterworks which are extremely valuable but unfortunately less known. That seems to be the case for many authors: once they are known for a popular or folk-based composition, the rest of their work fades in the dark. And the world knows us by the irritating Malambo.
A completely different approach is that or Astor Piazzolla (1921-1992) (www.piazzolla.org) who is considered a revolutionary musician who took the tango and not only raised it to the heights of the most modern academic music, but also created a whole new tendency which is being followed by modern composers. In some aspect, I would (cautiously) compare his role with that of George Gershwin. Take a look at his webpage, you will surely find many interesting facts about a musician who made the miracle of taking the spirit of folk (*) and creating a new world of music.
Un abrazo - Andrés
(*)Argentine tango is an urban product of native folk, afro-american rythms and European harmonies, but is generally considered among folk roots, being indeed a matter of discussion.