The band I like most at the moment is The Gower Allstars - brilliant musicians who hold the best twmpaths in the world.
One of my favourite folk songs is "Dinogad's Smock". Lynne Denman and Ffynon have turned this tiny little lullaby into a thing of magic. It's the oldest song in Britain, and comes from Y Gododdin, which also has the first mention of Arthur - you can't go wrong!
http://www.youtube.com/watch?v=ZBl7ZFI-QP8