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Don't miss Bruce Sterling's annual talk -- get there early for a seat, it usually fills several ballrooms.
Use iCal or Google Calendar and schedule your day before hand, but be willing to change your plans on a dime if you find interesting people to socialize with. You're 100% right that the sessions are useful, but its the conversations that make SXSWi worth going to (and the free drinks). Put more than one option in your iCal for every session in case your 1st choice is not great.
You simply must try the Iron Works bar-b-que (around the corner from the con. ctr.), but don't go in the lunch break btwn sessions unless you can miss the next session - it will be busy.
Also, best mole' ever can be had at Manuel's (congress and 4th). It's a dinner place more than a lunch place.
Sunday night is the fray cafe (in it's 9th yr at south by). Jessamyn will be there if you haven't hooked up with her yet. Hanging with Jessamyn at SXSW is weird b/c she's kind of a rock star there. Last year random people would approach her and introduce themselves. It's fun to watch.
My friend Mike is there (@mikemccaffrey) - find him and say hi!
Parties - in my experience these are only as good as the people you go to them with. They are so crowded and noisy that making new friends is hard in these venues. If you're tagging along with people you like, parties can be great.
Amazing connections can happen anywhere and anytime. I met Danah Boyd in my hotel lobby a few years back and had one of the best discussions of all of my SXSW experiences. Even the airport/plane is a networking opportunity.
See anything presented by Steven Johnson, who I know is there b/c I follow him on twitter. He's amazing. Casey McKinnon is there and tweeting her whereabouts.
If you see someone who looks famous, they probably are. Lots of celebs (both the internet kind and the real kind) abound.
I'm so jealous. Next year... next year.
Maybe It could get a netbook to loan out to us techies going to conferences...