My favourite festivals have always been those with few booked guests and an emphasis on participation. That means workshops, dances, singarounds, 'folk clubs' and showcases. It doesn't (necessarily) mean big concerts.
A compact site with plenty of informal spaces for music making is a real plus too, with a compact site you get plenty of opportunities for bumping into old friends and making new ones; in festivals with huge sites you can end up with a sensation where you feel like you've attended a completely different festival from a friend at the same event.
The site shouldn't be so small that's there's only one venue though; one of the beauties of a good festival is choice.
There's no substitute for great acoustics. Towersey barn is one of my all time favourite places to sing, and I'd happily pay to get into that singaround.
This sounds terribly snobbish I know, but there should be a decent ratio of musicians to audience members. I've been in festival singarounds where the room was packed, with people waiting to get in, but where only maybe half of the people in there were performers. (But I've also had great sessions where the pub was open to the public and doing it's normal trade and the festival session was in part of the public bar -- it does things to your repertoire and delivery that does...)

Miskin is exemplary in this regard -- four different venues, plus a nice courtyard and the campfire. Last year I ended up in the barn on Sunday night with maybe ten others, singing gospel songs, scout songs and, well, just about anything we could think of, and it was great. I missed the Bonging this year, but had a great time in other sessions. Lovely.

As for the Lincoln festival, we lived down the road in Newark for about 7 years and I don't think we ever made it there. I've been a couple of times, but that was when we lived in Chelmsford and took detours on the way up to visit my parents.