A good point made by Dai Woosnam on a different forum:

It may well be that the issue here was less the list of artists or the absence of a loved venue, but the fact that the festival a year off in 2007, leading - possibly - to a number of regulars "breaking the habit" as it were, and transferring allegiancies. In a market that is well-served by many festivals in the summer (I will not debate the "saturated" here), this can happen very easily. Equivalent examples cited were of much-loved pubs closing for refurbishment only to find that their cliantelle has moved permanently to other pastures.

It has a ring of plausibility about it. And if so, then it shows the wisdom of Sidmouth going ahead and having a scaled-down festival when it changed hands - just for the sake of continuity.