The Greek Theatre on the UC Berkeley campus is the perfect setting for summer concerts. It is an open air theatre, with stadium concrete seating and an open area up top where you can bring blankets and lie on the grass while gazing up at the stars listening to the music playing below.
Many large acts come through the Greek, such as Ani DiFranco, Jack Johnson and even Bob Dylan!
It isn't very big, it seats about 4,000 I believe, and they offer decent concessions and there are ample restrooms around. It's most comfortable to bring a blanket to sit on if you like to sit on the concrete "bleachers", or you may like it best lying on the grassy area above.
The acoustics are really great there as well, I've only heard one band sound bad there, and I'm pretty sure it was their soundman's fault.