Thanks for the tip about the Yokohama Jazz festival. I may just go to that.
Good idea for Hiroshima and Miyajima. Staying on Miyajima will be better than in Hiroshima. Make sure you go to the top of the mountain to see the monkeys and the great view of Hiroshima city and other islands. You can see some photos on my blog.
If you have time try to view Hiroshima castle and the view from there will give you some perspective on the city.