We have our first trip around the Paiute trail loop the same time as the National ATV Jamboree.......is this a mistake?  i.e. no place to camp or stay in motels and too many people on trail?

It all depends on where you planned on riding.  Most of the National ATV Jamobree trails are around the Fillmore/Kanosh area with some starting at the Freemont park and riding over by Hoovers and such.  The best thing to do is to log into their web page and look at the trail itinerary and see where their rides are going.  
With over 2500 miles of trails I am sure that there are plenty of trails that you could ride a trail or two without too much traffic.  Each day the participants are spread out enough that generally one jamboree group wouldn't even run into another group.    
The issue with the Hotels in around Fillmore will be pretty full along with the RV Parks.  I don't know if they acutally sale out.  You will just need to call and check it out.  There is a small motel in Kanosh.  The rooms are nice and inexpensive but there aren't any eating establishments there.  They do have a gas station and a country store with its claim to fame as having the largest Case Knife collection west of the Mississippi.