Although heavy emphasis is typically placed on word formation, especially inflection and derivation, in most ESL/EFL curricula, only a small fraction of the total words that appear in typical English textual corpora involve either morphological strategy. The vast majority of the words used in everyday spoken English are either short function words (mainly articles and prepositions) or monomorphemic content words, with nouns predominating. I suspect that in many teaching contexts, there may be more emphasis placed on teaching inflection and derivation than usage warrants, especially when such instruction comes at the cost of tightening the "nuts and bolts" of function and simple content words. After all, even if students make minor inflectional or derivational errors, they are more likely than not to be understood. However, the same cannot be said for learners with significant gaps in their lexicon involving function and especially content words. It can be argued that complete mastery of all derivational prefixes and suffixes in a language is worthless if the speaker is constantly at a loss for the basic content words to which said affixes should be attached. This is not to say that we should not teach our students about word formation in English, as they must certainly learn to master the relatively meager inflection that does exist in the language as well as gain a significant command of frequent derivational patterns, but rather that we need to be careful not to put the cart before the horse.
When teaching word forms to beginners, I believe that it is important to focus on simple content and function words first while gradually presenting the most frequently-used inflectional and derivational morphemes. Once students have reached a low intermediate level of proficiency and have acquired a solid core lexicon, derivation should be given more attention and compounding should be introduced in order to expand the learners' lexical range and, hopefully, increase her intuitive grasp of word formation and derivational patterns. Given the right instruction, enough practice and sufficient exposure to the language, I do believe that many students can correctly guess the right word forms more often than not, or at least develop some sense of what "sounds right" and "sounds wrong," even if that intuition is based mainly on receptive skills and passive knowledge, which Folse (2009) has indicated is often a good "first start." Although as Folse rightly points out, there is something of a chicken-and-egg causality dilemma at work here (viz., how can students be expected to guess the right word form--for example, how can they know that bookish "works" whereas *bookly does not--until they have actually been exposed to the former), I nevertheless believe that students can develop enough of a holistic understanding of lexical patterns in English to at least suspect that loveliness is word while sensing that there is something not quite right about *loveliment. I have developed this sense in Spanish, such that even though I sometimes still "invent" words to the amusement of my native Spanish-speaking friends and colleagues, I guess the "correct" word form a good deal of the time. Finally, less frequent but still useful and important word formation strategies such as clipping, backformation, blending and conversion should be explicitly addressed with more advanced learners. To be sure, the most commonly-used words formed by these strategies (such as smog, TV, gas and so forth) should be still presented to beginning and intermediate level students as discrete words and useful language chunks, but discussion of the actual mechanics of such word formation strategies are best left to higher-level classrooms.
English is not typical in its predominantly analytic (isolating) character, as languages with a relatively higher degree of synthesis (see http://en.wikipedia.org/wiki/Synthetic_language) are much more numerous cross-linguistically. In fact, outside of East and Southeast Asia, predominantly isolating languages are fairly rare. With no case other than possessive (i.e., formed by the addition of the suffix -'s), English has an especially impoverished nominal inflectional morphology, and compared to most other languages, including Indo-European languages outside the Germanic group (such as Spanish, French, Italian and Russian), Arabic, Korean and Japanese, which tend to be commonly spoken by our students, English verb forms (although not necessarily their meaning or syntax, especially when it comes to modals and phrasal verbs) are a model of simplicity. Consequently, most students are much more likely to have problems acquiring derivational affixes in English than inflectional ones, if for no other reason than English has so few inflectional morphemes to start with. In addition, prefixation is rare to nonexistent in both Japanese and Korean, so native speakers of those languages are more likely to struggle with English prefixes than with suffixes, which are rife in both of those East Asian languages. Based on my own teaching experiences, Chinese is the only native language commonly spoken by our students that is less morphologically complex than English (other than a handful of morphemes that straddle the border between full-fledged suffixes and separate words, Chinese completely lacks affixation along with many of the grammatical categories, such as tense and number, that are expressed through suffixation in English). As a result, native Chinese speakers often have particular difficulties acquiring both inflectional and derivational patterns in English. The only word formation strategies they really get "for free" are uninflected simple function and content words and compounding, which is especially frequent in Chinese. These facts have led me to become especially patient with my native Chinese-speaking students, who will almost always find English morphology to be a great challenge.
On the other hand, speakers of Romance languages, especially Spanish and French (which as Western Romance languages are rather closely related historically; see http://en.wikipedia.org/wiki/Western_Romance_languages), usually have fewer problems learning English word forms than speakers of Chinese (which, as noted above, almost completely lacks affixation of any kind), Arabic (which has exceptionally complex inflectional morphology, although it is of a quite different sort than that seen in English), and Japanese and Korean (both of which are highly agglutinative languages but which use suffixation to express very different grammatical categories than those in English). Unlike speakers of most languages outside the Romance (and to a lesser extent, the Germanic) group, native Spanish and French speakers find in English both familiar derivational patterns and, thanks to the many cognates due to borrowings from both French and Latin (and to a much lesser extent Greek), the derivational morphemes themselves. Thus, the morphological challenges our Spanish and French-speaking students face are of a very different sort than the ones experienced by their Chinese, Arabic, Japanese and Korean-speaking peers: although many of the derivational prefixes and suffixes in English are familiar to them in both form and meaning, there is never a one hundred percent overlap between languages in either respect. In addition, while cognates certainly aid their efforts to acquire English, faux amis are always lurking around the corner (thus, while English has devolve and Spanish has devolver, in which case both the prefixes and the roots are cognate, the two words do not mean the same thing at all, which can be said for dozens of similar pairs of close cognates). Still, on balance Spanish and French-speaking students usually find acquiring English word forms to be easier than speakers of languages unrelated to English.