Funny since I've just been listening to The Sea & the Rhythm EP from a coupla years ago. Nice stuff. Quite a few other artists in that crowded quirky alt-folk (or sometimes being called freak folk) field these days. Just listening to the Sunset Tree by the Mountain Goats too and it's not too far off, although the Iron & Wine guy plays it a little closer to his folkie roots. The melancholy acoustic side of Nick Drake that came out in full bloom on Pink Moon is always lurking around the corner for many of these guys. Devendra Banhart has become somewhat of a curator for the movement and shows up all over the place, but his records are first rate and his guitar picking is first rate too, albeit a little more quirky than many others. Holopaw is a favorite of mine, along with the Ugly Casanova album from a couple years ago that combined the talents of the main guys from Modest Mouse, Holopaw, Black Heart Procession and Califone, all big favorites, although not all what one would normally think of as folk. Anyway, plenty more and tentoze and Stoney and Mike and some of the others can guide you to some first rate picks, but here's another thread that asked the same question at Head-Fi awhile back and got some pretty good responses - and I probably said pretty much the same thing there too because if it ain't broke ...

http://www5.head-fi.org/forums/showthread.php?t=88199