In addition to the ideas on songs, I'd add to pick ones you LIKE singing/playing. Stuff you can have fun with. I've never met anyone at a festival, where I've been performing or attending, who did not want to have fun. Cats at Work said it above (but I'm going to say it too) If you're having a ball doing your thing, the audience will as well.

I've seen major names where it was just another ho-hum gig lose half their audience (no small task when its 7,000 people in a natural ampitheatre) and no-name bands & musicians having an absolute blast at the same festival pull in the whole crowd will they had 'em eating out of their hands. Guess who got invited back the next year with a better spot in the schedule?

Good luck - and have fun!

Pete