The Hosteling Internation hostel in the Loop is excellent. I stayed there three nights when I was looking for a place to live here. It's near some stuff down there although the Loop isn't hugely full of nightlife. But it's right next to the Jackson Blue/Red line stop and the Library stop for everything else. If you want to park really cheap, find a small neighborhood like Ukranian Village or Roscoe Village, park your car on a small side street (make sure it's not street sweeping day!), and just leave it there. I leave my out of state car on the street for months at a time.
As for stuff to do, check out
www.timeout.com/chicago and
www.metromix.com. MetroMix has every festival this summer listed too. Just give me a month's notice for the date of the meetup, I'll need to bid the day off.