Okay. The past couple of years we stayed at the Holiday Inn Express at 155 Blvd Rene-Levesque East, Montreal QC H2X378 phone1-514-448-7100. The rooms are decent but could use some updating. Free breakfast is included and they have under ground parking. Cost is around $120/night. The best thing about this hotel is the price and the location. You can walk to the festival from here in 10 minutes and to Old Montreal in 20 minutes. You can walk to China Town in 5 minutes.
Prior to staying at the Holiday Inn Express we were staying at the Montreal Marriott Chateau Champlain. 1050 de la Gauchetiere West, Montreal, QC H3B4C9. Phone 1-514-878-9000. This is a very nice full service hotel and the pricing this June is pretty decent at $224/night. They have a restaurant with a bar and the breakfast is fantastic (not free). The location gets you to the festival by foot in 20 minutes and to Old Montreal in 25 minutes. We love this hotel but decided that since we never spent any time there except to sleep, we would stay somewhere less expensive.
If you need to cab around the city it's usually about $10 CAD. Russel and Nick gave some great suggestions of sights to see in their posts above. You'll notice Celine Dion playing over the PA system outside of Notre Dam. She got married there and they're very proud of that.
There's a couple of dishes you may want to try while dining out. One is called Poutine which is French fries covered in fresh cheese curds and hot poultry gravy. Some restaurants have jazzed up versions of it with additional toppings. It's very popular and you will see this everywhere. The other item you'll see advertised is smoked meat. This is similar to pastrami in NYC but they use brisket and more aromatic spices to cure the meat. It's served as a sandwich on rye bread and typically slathered with mustard. Other than these 2 things, you find many excellent dining options with a bit of a European flare. I really like the area in and around the old city. There's a lot of great dining options and its beautiful.
Enjoy yourself there. I hope you like Montreal as much as I do. I'll be back in 2014 for sure.
Don't forget to take advantage of the bikes that are available throughout the city. It's a great system.