I agree with all of the advice above, and have one thing to add:

START SMALL and expand your event after you have some experience. If you try to do too much first time out, you're asking for trouble. Our Washington Folk Festival (the free one Bill mentioned) started out as a one-day event with only 3 or 4 stages, and over the years became a two-day extravaganza with 7 or 8 stages. There are bound to be problems you haven't forseen, so keep it easily manageable at first!

Good luck and HAVE FUN!

Cheers, Nancy