Rockland, Maine, Lobster Festival, August, 2011
I would rent a cottage on the St George peninsula. It's beautiful and secluded but a short drive to Rockland for the festival and great restaurants. Search for rentals in Marshall Point and Port Clyde at the end of the peninsula, or Owl's Head, Sprucehead, and South Thomaston closer to Rockland. it's all beautiful!
St George Cafe
9 Bridge St, Henniker, NH 03242
To be honest, we found the festival super-lame and the lobster overpriced. It was supposed to be one of the highlights of the trip and we thought it was just terrible; sort of C-list county fair stuff [what this Canadian imagines it to be]... However, Maine is awesome, and you can't go wrong on any of the cities on the coast. Eat at some seafood shacks and you'll have your fill of amazing lobster rolls and chowder, with more charm & half the price.
You'll get varying opinions on this topic for sure. I think the festival can be good, kitschy fun but I wouldn't consider it a "foodie" event.
Come to midcoast Maine for the great food - no need to center that around the Festival. There certainly is a buzz in town that week though....