I live about a five minute walk from Subterranean. It's in Wicker Park. I chose to live in that neighborhood so obviously I love it.

Haven't been to SubT yet, although I always see flyers for concerts I'd like to go to (I just always get wrapped up in something and never go). It's a small venue, a little gritty, but I do know that Subterranean is one of the more well-known music venues in Chicago (along with Double Door, which is across the street) and has concerts all the time. Mostly smaller shows with cult followings. The bar downstairs is very popular too.
Not any hotels in Wicker Park that I know of but there is
Wicker Park Inn, which is just a few minutes walk from Subterranean. I've never used it but it has good reviews. Otherwise, you could stay in a hotel downtown and take cabs (10-15 min ride, about $10-15 depending on traffic) or the Blue Line train (it's only 3 stops to downtown, about 5 mins ride) from there. The Blue Line train literally drops off right behind Subterranean.
As far as Wicker Park, it's a fun hood. Always busy, always people walking around til the wee hours of the morning, so it's generally safe. Quite a lot of hipsters but you'll find pretty much a little bit of every kind of person here. Lots of restaurants and bars, more than you could handle in a weekend. Pretty much anything you want from sports bars (6 Corners) to trendy clubs (Empire Liquors, Burlesque) to plenty of dive bars within a ten minute walk from SubT. Restaurants, there's upscale Italian, NY pizza by the slice, sushi, gourmet hot dogs, taquerias, greasy spoon diners, etc etc. Pretty much anything you want within a ten minute walk.
Feel free to PM me for further details or questions. Heck, maybe I'm planning on going to the same one!
[This message has been edited by ChiAggie (edited 3/1/2012 10:57a).]