The balloon flights take off about sunrise and last about 1 - 3 hours (there are short and long programs - long flights basically last until the balloon goes out of the scenic region). They take you from your hotel about 1 hour before the flight, then take you back there, so it may feel like half a day totally. I used Cappadokia balloons and highly recommend them. If you are based in Goreme, this will minimize the travel time. I think July will be quite hot, so you may add some time for rest at the hotel in the afternoon.
During 2010 Istanbul is designated as the cultural capital of Europe, so it will be full of events, exhibitions, concerts, everything. If you are into this, 3 nights might not be sufficient, but again if you don't insist to see
everything, can be enough. The program is at
http://www.en.istanbul2010.org/index.htm.