Small cities or large towns in northern New England and place to stay

Try Portsmouth NH, it has an area called Strawberry Bank which might fit the bill. Other than the cities you've mentioned most of the cities do not have the ambiance you seem to want.

Also what about Bennington Vermont or Brattleboro Vermont? Montpelier is in a better location for me, but I will look at all ideas

Maybe Brunswick (home to Bowdoin College), Rockland, or Bar Harbor, Maine. All would meet your requirements. Haven't been to Bangor in many years, but it has changed. I wouldn't recommend Augusta. As the state Capital it pretty much shuts down after 5 and on weekends and doesn't really have anything of interest outside of the state museum.

You might consider Concord NH. I've heard good things about the Centennial Inn on Pleasant St. Take a look at events at the new Red River Theater which shows independent movies as well as main stream. Not sure The Barley House on Main St has microbrews. Hippo, a free newspaper covers events of all kinds in the Concord/Manchester/Nashua area. I saw the beer store on North Main Street, Concord has tastings on Thurs nights. emalloy's suggestion of Portsmouth might be a better fit and Portsmouth has more going on at night.

I second Portsmouth, NH although it isn't all that far north. It has a walkable downtown area, microbrewery, chain hotels, great restaurants, history, nice architecture and it's on the Piscataqua river a short distance from the ocean. There are also boat tours around the river or an all day excursion out to the Isles of Shoals.

Another NH choice could be the Littleton/Bethlehem area. Beautiful scenery near Mt. Washington. Not sure about a microbrewery though.

In VT, Middlebury might be another option. Montpelier is nice too but remember it is quite small. I don't think Stowe is what you're looking for. It has beautiful scenery but is very "cute" and touristy.

Thank you.These cities all sound interesting. I think I'm still having trouble with types of places to stay. The scenery in all of these areas is beautiful but I when I get to my destination, I just want to walk around.
Another idea: Waterbury Vermont?

What about Portland, Maine?

Yes, I have been to Portland Maine and Burlington Vermont several times. I think I mentioned that. I don't expect anyplace that big, just something a little less country than most of the surrounding areas.

I think Montpelier would be great as would Middlebury. Montpelier is a bit "bigger" - has more shops/restaurants than Midd.
Waterbury is OK, but I think you'd like Montpelier or Middlebury much better.

Brattleboro Vermont (south-eastern edge of the state just across the river from NH) has exactly what you're looking for. Lots of people there who have moved up from the cities (Boston, NY, Newark, etc.) so it has a nice mix of locals and people living their by choice. Good restaurants, shops, art scene, etc.
www.brattleborochamber.org

I am a bit late getting into this discussion, but I think Middlebury might just fit the bill. Nice college town, so not too "countrified" -- lots of good restaurants, historic sites,shops, Middlebury Town Hall Theater, etc. Always something going on in this very walkable Vermont town.