So this thread seems to have evolved from the original "strings" topic to encompass acoustic instruments of all flavors. Quite frankly my favorite music is from those who explore the use of unique instruments in a rock format. Someone mentioned flute. Mr. Anderson did a phenomenal job with the flute. In an interview he said the reason he took up the flute was due to the fact that he felt he wasn't good enough on guitar (could have fooled me). Another phenomenal use of flute was Peter Gabriel in Genesis. I am always amazed at how the guitar work of Steve Hackett melded so well with Tony Banks keyboards and Peter's flute.
As for strings, I would suggest taking a look (you tube) at the version of "Rainsong" that Robert Plant and Jimmy Page performed with strings in the background. It's very cool especially with Jimmy playing acoustic guitar. He's simply amazing!
There is so much good music out there that involves strings/acoustic instruments.....many have been mentioned but consider also, Loreena McKennitt (what a wide variety of instruments she employs), ELP and the outstanding guitar work of Greg Lake also Neil Young, check out Afrocelt Sound System for some Celtic based world music, even DMB use violin, and a variety of wind instruments, Traffic (more flute)....I could go on and on. Geez, how can you knock Jethro Tull? Listen to Mother Goose!