camping's not the only option. The smaller inns right near the ski resort book up pretty much a year in advance, though there is the big Prince hotel that actually runs the resort where the festival is. If there are any rooms there left, they tend to be pretty expensive, at least $150-$200 US a night, though they're always hard to get.
Last year, I stayed at a traditional inn at the town with the nearest rail station. Your best bet is to go through a travel agent to book these, but don't worry; shuttle buses run all the time straight from downtown, and they stop at inns along the way, too.
You could camp, though I've heard horror stories about people broiling in their tents when the sun comes up and about nasty spider bites.
That said, it was the cleanest, best-sounding, best-run festival I have ever been to. It's pricey, but definitely worth it. Everyone is polite, drinks are cheap, the sound is amazing, and there's plent of room at the venues, and no overbleed of sound between stages. It'll be tough to top when Battles' performance from last year, though. Go to the show, and you won't be disappointed.