That sounds fun! Know that you'll be paying top dollar to stay a weekend in August in downtown Newport, but if you share a room that wouldn't be as bad. If you want to be right in the center of things, I'd recommend either the Newport Harbor Hotel or the Marriott. Both are in the middle of downtown Newport and walking distance to everything. That said, they'll be the most expensive. To save perhaps a little money, there's a Quality Inn that's technically in Middletown, but it's right on the NPT border, and right across the street from a beach. It would be a cheap cab ride to down town, but not walkable. The further you stay from downtown, the cheaper the places will be.
For things to do, I mentioned the beach. There's also cruises you can go on - The Flyer, a catamaran sailboat, is my personal fav. Has a bar onboard and takes you out onto the bay. There are two wineries in Newport County. Newport Vineyards and Greenvale Vineyard. Newport is a bit closer and descent, and you can tour the winery for a fee. Greenvale is in a country setting and really charming. Bring a picnic lunch and buy a bottle of their Skipping Stone white wine and sit overlooking the vineyard on the water - DIVINE! But I'm partial b/c I worked at Greenvale.
Aside from that, there's lots of boutique shopping downtown. There's place where you can paint your own ceramics and fire them - so much fun! Obviously there's also the mansions that you can tour (look up Preservation Society of Newport for more info), and there's the Cliff Walk, which is a paved walkway that overlooks the Atlantic Ocean. Or I highly recommend taking a drive out to Castle Hill Inn and having a drink or even lunch. It overlooks the bay/ocean and is magnifiscent! A little pricey, but totally worth it for the experience. No jeans though.
Then there's the nightlife! Depending on the atmosphere you're looking for, there are bars with live bands, bars with DJs, and just some low key pub type places. For bands, check out Pelham or Newport Blues Cafe. For DJs, check out Christie's or The Landing. For low key, check out Busker's Irish Pub or Star Bar.
If you want anything else more specific, ask away! You asked pretty general questions, so I'm trying to answer as much as I can w/o rambling. So feel free to ask for more specific info on something. You came to the right place!