Last year we stayed in Hatters Hostel (I think it was the Hilton Chambers one) and it was really good. Probably about a 15 minute walk from the bus station or so. I'd say it's about a 30-40 minute walk to the venue this year. The organisers put some of the artists up in there too so I'm assuming it'd be their recommendation.
Plus, there's an amazing restaurant round the corner from it called Home Sweet Home that make the most amazing pulled pork you'll ever eat!