I was on the fence originally about Folklore, but ended up picking it up due to the setting, concept, and the style of gameplay. Overall, despite a few flaws, I'm rather happy I picked it up.
First of all, those that know me know that a good story and presentation can cause me to forgive a lot of faults. In the story department, I must say it's probably the best I played all year, and likely will be the best I play. No, I didn't play BioShock (but heard mixed things about how it starts strong and whimpers out near the end), and I won't be picking up Mass Effect this year. But those two are probably the only ones that, in my mind, can give Folklore a run for it's money. What makes it so good? It's a murder mystery with a lot of plot advancements and twists, especially near the end, despite how relatively shor the main quest is and you play a chunk of the game twice through two different viewpoints. The characters are certainly a nice change from what you find out of Japanese companies these days, as are the whole settings of a small Irish village and the Netherworld. The question is raised that if it is 100% certain that there is a happy afterlife, would that knowledge positively or negatively affect humanity? I just liked how the characters didn't fit your standard molds, and the weird creature design in the Netherworlds.
The graphics aren't the technically most impressive around, but the art style is certainly nice. Lots of the Netherworld realms have a lot of life to it, from the lush Faery realm to the rocks and waterfalls in Hellrealm, and the submerged city in the Underwater Palace. Just vibrant use of colors, and a lot of odd and memorable enemy designs. The few actual cutscenes are also done rather well. However, most cutscenes are done in a graphic novel/comic book style which is just odd - no voice acting, the background music doesn't always match the mood of the scene, you can't always tell which character is saying what. Thankfully, the interesting story helped temper some of the disappointment in this - a good story itself can help mitigate some of the flaws in the way it is told.
Speaking of the way it is told, the story is divided into seven chapters. In most of them, you actually play them twice, once with each of the two main characters. They go to the same realms with the same layout, so there's a bit of repetition here. Similarly, you run into the other character at story points since you're going to the same place, so some of the cutscenes are either fully or partially repeated. Still, while going through it the second time is less interesting, there are a few new story points that are revealed, though not as much as the first time through. You can play through in any order, even going through multiple chapters with one character then going back to the other, but it's definitely better to alternate characters and play the same chapter back to back as it answers a few grey areas in the story from the first character and clarifies other things. In retrospect, it probably would have been best overall if they just had you do this automatically, as I think the story would have been lessened a bit if you go all for one character first.
As for battle, the character doesn't directly attack, but summons Folk for a very brief time to unleash the attack before fading. Folk are the inhabitants of the Netherworld, and you gain them by absorbing their Id. Usually just beat them until they're near death and their spirit is hovering above them, then use the motion controls to yank them out and absorb them, at which point you can use their attack for yourself. Most characters you simply flick the controller and it's done, but some minibosses and major bosses require a lot more effort in that you'll need to shake, tug, and bash the id out. This can get physically tiring, but thankfully it's only on a fraction of the enemies in a level. While both characters play similarly, they're not totally identical. Some enemies only appear for a certain character, and some Folk have different attacks for the two characters. One character isn't too good offensively, but their summoned Folk are fully summoned and can thus absorb enemy attacks, allowing Ellen not to get hit. The other character, Keats, only summons a phantom Folk of sorts, so enemy attacks will go right through them and hit him. However, his offensive Folks are notably better. Folk attacks can be upgraded by absorbing more of them, killing a number of either any or certain enemies, using collected items, and so forth. Also while later Folk are different they're not necessarily better than the previous ones. They all balance out pretty well, allowing you to use whatever suits your play style. In fact, on the last boss I used the first most basic Folk for a chunk of the fight rather effectively. Some Folk are immune to physical attacks and are vulnerable to elements like wind and water, so you'll definitely be shifting among your Folks to tackle certain enemies. Chapter bosses tend to need a good three or so Folks to attack them under different situations, and the hints for this come in the form of picture book pages found in a level. While it doesn't specifically say what Folks to use, you can generally tell from the picture and a little trial and error.
The whole game took me 20 hours, and that includes the side quests, most of which have relatively minor rewards and no story connection. There are a few, however, that expand upon the story a little bit. Toss in the fact that you're playing most levels twice, and it's relatively short. However, it's still good, and a short game like this keeps the story moving along, particularly with all that's going on and the various twists. For most people, it's probably not worth $60. But if you like the demo, you should certainly look into picking it up after a price drop. Based on the sales numbers, that shouldn't take too long. Too bad too, it's definitely got cult potential.