Jamie (OTRTexan) had the same questions in October last year.
Here is the advice I gave him then.
I haven't shot balloons since I went digital, but I hope some of this can be of help.
Forget about tripod and manual control during inflation and launch, you need to move your vantage point quickly as work progresses. It is fast-paced and best treated as a pj gig. Short focal lengths (normal zoom used on the short side) and getting as close as possible without getting in the way gives best results. Aperture priority and center-weighted metering makes life a little easier. If you meter off highlights with -1EV EC, exposure should be close enough. As soon as there is enough light to use a CPL without raising the ISO too much, do so. When the launch is over it is time to bring out the tripod and telezoom for the flight. If you can be there for landings, switch to the normal zoom again. For the night glow event, use a wide zoom.
Good luck! I think you will have a great time at the festival. Balloonists are mostly colorful characters but nice to be around except during launch when everything is so stressful.
Read more: Balloon Festival - Photographic Technique - NikonForums.com
Try to get some shots of the burners at the end of a long burn during inflation, the glowing nozzles and the flame makes for spectacular photos. Otherwise, just go with what looks interesting and compose as much as you can for the colours.