Festival de la virgen - Illuman, Ecuador (near Otavalo)
small ass town that goes nuts with this party. they have huge fireworks sculpture towers which go off and the people dance around crazily under them.
loads of hot ecuadorian aguardiente (alcoholic beverage) and the people are totally cool.
also - New Years Eve in Merida, Venezuela. They spend a few months making these life size dolls of political and celeb characters, stuff them with mega explosive fireworks and explode them in the streets on new years eve. Some really good clubs, amazing girls (its a university town). If you want to go on the cheap go to Hotel Italia where 6 bucks gets you a small clean room and alot of travellers, locals to meet. Tell the hilarious owner that "Seņor America" sent you;)
Merida is an hopping andean town with a teleferico (highest in the world) that takes you 15,630 feet up to Pico Espejo with incredible views.
Really South America has year round kick ass festivals of all sorts...highly recommended.