What is good accommodation for festival (camp or hostel)?

I haven't been to Rock Werchter specifically but I have been to a few other Belgian festivals like Pukkelpop (similar in size).

There's a few aspects to your question

Fun(Music)

Hands down the camping area. I've seen on the website that all 10 camping areas are located surrounding the festival area so you'll always hear the music even at your tent which is a nice background noise if you're socializing with others. Socializing is a very big part of the camping area and certainly towards the evening you'll be able to sit with most people and act like they're old friends. To me this aspect was one of the best parts of festivals.

Comfort sleeping space

Obviously a hostel wins here though I could sleep just fine in my tent. Just make sure there are no stones sticking out of the ground when you place your tent.

keeping my stuff safe

Festivals come with their own risks. There will be police and security everywhere but aside from some patrolling on the campings there won't be much in that aspect. You can bring a lock but that's not very useful with a tent anyway. What you can do however is rent a locker at a reasonable price (€20 for 4 days).

Easy way to cook food

• For safety reasons, gas burners and installations are forbidden by order of the fire department. However, simple camping gas burners with small cartridges will be allowed on any camping other than The Hive.

• Generators cause extra trouble for all those would like to catch some sleep and they constitute an additional safety hazard. Leave them at home for they will not be allowed on the camp site.

• (Small) fires, torches, candles, cookers, charcoal BBQ, etc.: fire is dangerous, especially with so many tents together. So it is strictly forbidden to makes open fires! The same counts for the festival ground, by the way.

Source

Likewise there is no power supply available.

Cooking your own food will be tricky. On the other hand: festivals are not the time for you to be health conscious so you might as well indulge yourself in our unhealthy eating habits. Something I noticed at Pukkelpop is that a lot of locals create temporary food stands in the street leading up to the festival and camp terrain: people offer hotdogs, hamburgers, fries, etc for very reasonable prices.

Bringing your own drinks on the festival and camp terrain is forbidden and security will search for it, though there are ways around that (if you're male: put cans of beer in the front of your pants). Depending on how innocent you look and how much people there are in line you might be able to get away without inspection.

Cheap

What is cheap? You're paying €230 for 4 days of festival so I'd say €10-€20 a day isn't much. If you don't buy stuff at the festival terrain (which you most definitely shouldn't), you can get by reasonably well. If you don't mind walking a bit further you can go to a local bakery in the morning though be aware that of the 80.000 other visitors that day, several of them will have had the same idea. I was a bakery 20 minutes outside of the camping area around 6AM and I wasn't the first in line at all.

Considering the prizes of Belgian hostels (€30+ per night), a hostel would be entirely antagonizing this objective. A camping ticket costs you €20 for all nights.

Lock your Valuables Away

I think the heart of the question lies in this requirement:

keeping my stuff safe

Fulfilling this is somewhat accommodation-independent. You could look for luggage storage places -- such as those usually available in train stations -- or lockers -- some festival campsites do have them --, and use those for the valuables you won't be needing throughout the festival. There's a chance that the price of such services combined with the price of the campsite will add up to the price of a hostel bed, so you might as well just stay in the former. This is of course assuming that camping is cheaper than a hostel, and that the hostel provides free lockers. Moreover luggage storage in train stations is sometimes limited to a maximum of X days, so you must make sure you don't leave your stuff there for too long, or at least that you check it out and in again to reset the counter.

All the other criteria you mention are somewhat subjective: what is your idea of fun/cheap/comfortable/cooking?