Do you have a link to the festival info? The only light festival in February I turned up in a quick Google search is in Otaru, which is up on Hokkaido far away from Tokyo.

The train (Nozomi shinkansen) from Tokyo Station to Nagoya Station costs about $118 each way and a couple of bucks less if you take the slightly slower Hikari shinkansen. If you don't speak/read Japanese, Hyperdia (http://www.hyperdia.com/) is your friend for train travel in Japan.

Hotels run the gamut. You can spend big or big-ish bucks at the Marriott, Hilton, or similar hotels, and you can spend $70-80 or less at a business hotel.

If it's your first time in Japan I'd spend all 4 days in/around Tokyo, unless the festival looks *really* compelling to you. If Tokyo is old hat by now then a night in Nagoya might be a nice change of pace, with or without a festival, though others would likely suggest you go elsewhere for a one night trip from Tokyo. Some on here think Nagoya is boring, I think it's fine for one night every once in a while. Use the search function and you should turn up a not-too-old thread with suggestions on things to do there.