I think the sound your looking for does not lie in equipment (digital versus analog) or effects like reverb. The sound comes from the character of your songs (including lyrics) and the way your mix is arranged. If you want sparse, then keep the songs to a few instruments and voices. If you need multiple instruments, space them over time like the Castenet song you cite or allow for plenty of quiet passages in the song. Fill your mixes with a lot of dynamic variations and avoid squashing the hell out of everything with too much compression. You could also track live by recording everything at once rather than track by track. It's hard to do if you are a solo musician and the mic set up can be a challange, but it gives a band a very real, authentic sound. Personally, I would avoid the heavy reverb approach. I don't really hear it in Neutral Milk Hotel or some of the other bands you noted. In fact, there seems to be more of an up front sound to the vocals. Finally, although this thread took a quick and nasty turn, I understand where you are coming from and what you are trying to acheive. As you note, this kind of raw authenticity has been around for a long time. You can find it in a lot of places from Gillian Welch to Stephen Malkmus, from old Dylan to Cracker, and in new stuff by groups like Bright Eyes. Neil Young made a career of it with songs like Last Trip to Tulsa, For the Turnstiles, Ambulance Blues, etc. But, again, they key lies in authentic playing, songwriting, and arrangment.
