In 2007 the Carmel Art Festival is in its 14th year. I visited on the busy Saturday when the "Sculpture in the Park" at Devendorf Park along Ocean Ave was impressive, and Mission Street was closed off for displays of paintings. The festival also has a Youth Art Show, Quick Draw, and Kids Art Day. There is also live music each day from roughly 1 to 5pm.
A unique idea with this festival is that all Plein Air art must be completed during the festival in the local area. One painting must be competed on the Thursday of the festival and one on the Friday. I guess that would explain why I saw several people painting on Thursday when I was jogging through Pacific Grove. There is also a qucik draw event the last day of the festival.
The Carmel Art Festival is always the weekend after Mother's Day weekend; in 2008 the dates are May 15-18.