I would just stay in town. There are plenty of small neighborhoods adjacent to the main part of town that are very quiet. It's not a big place and everything is walkable...no more than 15 minutes on foot to anywhere you might want to go. We stay at The Herdwick House B&B...it's in town but in a neighborhood that is a mix of residences and other B&Bs. It's very quiet and about 8 minutes walk west from the Moot Hall on the town square.
The Theater on the Lake, where the jazz festival is held, is not in town but on Derwentwater, the lake next to Keswick. It's about 8 minutes walk southwest of town right on the lake. It's an indoor venue unless they plan on having some of the music in the adjacent park but you would have to look at the website to see if that's the case. You most likely won't hear anything of the music if you are staying in town.
If you don't have a car then I wouldn't try to stay at a farm or B&B in the country unless the innkeeper can tell you there is a bus stop very close by - that's where I would ask first. If there is a bus stop nearby then it might be a lovely option. The other issue, though, is that the buses don't run late into the evening for the smaller, more outlying places they serve...many routes end by about 6 in the evening except for the main arteries from town to town which makes for an early night if you are staying at a more remote location. Even having dinner in town or catching one of the concerts would be difficult. There are always taxis though!
The bus service in the Lake District is excellent for getting from town to town and to trail heads if you want to hike or walk. What I have found is that most bus drivers are happy to drop you off at places that aren't official bus stops...the problem is catching a bus from somewhere that doesn't have a bus stop.
