Here are some housing options in the Olympia area:
Chez Cascadia - a great little hostel on Olympia's Westside.
Phoenix Inn - a locally run hotel in Downtown Olympia.
Fertile Ground - This is a wonderful local eco-bed-and-breakfast. Great people, beautiful house and garden. 10 minute walk to downtown festy location. Reservations: curator@fertileground.org
Capitol Plaza Hotel - Offering festival-goers a discounted rate. To make a reservation: 360-352-7202