Two Words: Pie Week. An entire week devoted to the making and eating of pies, and it can get more than a little crazy. This was a holiday in Warhammer, and it was very fun to participate in it in WH Fantasy Roleplay.
You played the Warhammer RPG? Amazing universe. Really dark, but funny as well. Good system too.
I also GM'ed an adventure for it with a local "honey festival", which involved regular festivities and a contest of who could make the best mead and other alcoholic beverages.
One of the contesting barrels contained chaos berries, which causes illnesses and mutation. So the jolly festival turned into a carnival of horrors and gave my players clues to investigate, which was part of a bigger campaign.
Anyway, there's lot's of fun stuff you can do with festivals. It's not just a collection of silly minigames, it's an excellent plot hook for quests.
If you visit the same city 20, 30 times during your game, it just makes it seem more like a real place if there's something interesting going on once in a while.