The first time I went to a session, I was very nervous and I ended up not playing a single note. I knew none of the tunes (having learned classical violin rather than folk fiddle) and felt very self-conscious. At the end of the session, one of the organisers came over to talk to me and I explained that folk music was pretty new to me, and he immediately suggested that I go on the Internet to download some free sheet music. He gave me a few titles to look at and said he looked forward to seeing me again. The following week, having downloaded and learned O'Carolan's Concerto, we played it together. I was terrified, but he was very supportive and it encouraged me to continue. Now, if I'd taken music along and someone had told me to put it away, I would probably have left the session and never come back.
Having been brought up with 'thou shalt play by the dots, thou shalt play only what the dots say, thou shalt not deviate or improvise', I found it extremely difficult to learn 'by ear' and I was always full of admiration for anyone who could do that, because I really struggled. It's funny really, because one of my friends can't read music at all, and thinks that people who can are 'amazing'. It took me about two years to be able to go to a session without the dots, and just pick it up as I go along. It does get easier with practice. However, I always remember how I started, and would never admonish anyone for using the dots. People learn in different ways, and I'd rather they played by the dots than didn't play at all.
With regard to the suggestion about the Kindle - I bought a Kindle DX (the one with the larger screen) and put some music on there in PDF format. It works a treat and is far easier to carry around than a binder full of paper. I'm not sure about its beer-proof-ness though