Staying in telluride during the festival is extremely expensive- also keep in mind that you can't drive in to telluride during the festival (or I think at any other time) unless you are a resident- they force you to park off site. If you're not into staying out super late, go stay in mountain view and take the free gondolas down to the festival. Be aware that you may have issues adjusting to the altitude, also bring plenty of sunscreen.
The food at the festival is far and away the best festival food i've ever had- and to add to that, the festival is always carbon neutral in that they offset the entire usage of the festival either with carbon vouchers or through wind power, etc.
Also, if you haven't gotten your late night passes- these are some of the fun shows, get them now, many are already sold out (all the Yonder shows are sold out)