The place we've been staying at teh paast few years is very good, and even if they haven't got the rooms themlelves they might be able to advise - these bed and breakfast people tend to know each other. There's a whole row of B and B places next door to each other on the same street, and it's close to the centre.

Here's a link to them - Groveside, Vicarage Road, Sidmouth You'll see they specifically mention the folk festival on the page.