The Shaw Festival is smaller and perhaps more intimate and of course the era of its plays is somewhat closer to contemporary times. The town itself retains some charm as a posh summer colony a century ago but is much more evidently a tourist destination now. Obviously it is just down-river from one of the world's earliest draws for gawkers, the Falls, with plenty of colonial history and wineries in between.
Stratford, in contrast, is a small commercial and industrial city which was more self-sufficient before the festival was founded in the mid-1950s. Justin Bieber grew up there without seeming to notice one of the world's great Shakespeare festivals in residence. In its bigger schedule, Stratford sometimes risks new plays but also relies on musicals with no connections to the Bard, this year staging a revival of the Who's Tommy in the faint hope of taking it to Broadway.
Stratford is picturesque, with the festival encouraging preservation of its typcial Southern Ontario homes, surrounded by pretty farmland. But the area has no particularly big tourist draws away from the festival.
Whichever you pick, buy your tickets early.

You could reasonably stop at both ... seeing a show each way... accomodations during early July are very high, so you do have to plan ahead... here are the websites

www.stratfordfestival.ca

www.shawfest.com

Pick the play or plays you most want to see, and then go to which ever town is presenting them.

Both towns are in my book of interesting houses and other small buildings, and it's a toss-up as far as looking at architecture goes. Stratfore has a few good restaurants and so does Niagara on the Lake, which also has, as noted already, the falls. Stratford has a few swans for you to look at.

So it all really boils down to the plays,

BAK

The last time we went to a play @ Shaw in NOTL, they lip synched so that was it for us. The week before we were in NYC & the cost of the Broadway tickets was less than Shaw. And, no lip synching!

Lip sync