July Summer Festivals

Hi, I want to see a summer festival and participate in it... playing games/eating/wearing yukata with friends... I will be in Tokyo/Kyoto during the period of 12-21 July.

1) How would you recommend I catch such a festival?

2) I will be in Kyoto across the Gion matsuri but I read that its very crowded. Should I give it a miss or will that be a waste?

I would suggest looking at this thread for a list of festivals. http://www.japan-guide.com/forum/quereadisplay.html?0+99544. Be aware that most festivals will occur on different dates depending on the year so use the guide to get the approximate date and then double check the correct date.
As for the Gion festival, i have never been so don't want to give you an uninformed assumption BUT from internet descriptions and reviews it looks like a lot of fun.

For the typical summer festival atmosphere, the Gion Matsuri's Yoiyama (July 16), Yoiyoiyama (July 15) and Yoiyoiyoiyama (July 14) are particularly recommended.

Gion matsuri is crowded but fun. I suggest going in the evening as it will be very hot.

In central Tokyo, on July 13-16,
Mitama-matsuri will be held in Yasukuni shrine.
http://www.youtube.com/watch?v=I90wkctyui8
http://www.yasukuni.or.jp/english/access.html

sorry for the late reply, i went for the festival and it was really fun! i got to try the games like you see on anime and everything :) thanks for the advice!