There are folks out there (not in the filk community) who have made careers out of doing nothing but cover songs. And there are folks who have written lots of songs but rarely perform them (e.g. Kanef).
I have a similar problem with the self-confidence issue. There are times I think I sound like crap. I need to practice more. I'm afraid of interrupting someone. And no one is a harsher critic of me than myself.
There are a few organizations that have helped me with the self-condifence issue. One is Toastmasters International
. While it's geared toward public speaking, communication, and leadership, its concepts can certainly tranfer to the filk arena. If I ever start holding house filks, I want to pattern the agenda after Toastmasters.
I've also noted that filkers are rarely hecklers. If they don't like a song or a performer, they'll either remain quiet, or leave.
But what really comes through isn't the song, the music, or the voice. It's the passion. What songs do you feel strongly about? The passion will come through. (This is why I like Joe Ellis' "And The Sky Full Of Stars" so much -- I can put a lot of emotion in my voice as I sing it.)
"Bad performance" is correctible. Keep practicing. And keep going. Never mind what your audience says.