It’s impossible to live in Berlin without being reminded of the past. Like most great cities it has its monuments and its plaques, its museums and its landmarks, but the scars it bears from the last century alone would bring many cities to its knees. Ten minutes walk from my apartment lies Görlitzer Park, its role as the former gateway to eastern Germany evident in the former station platform buildings now converted into a popular summer café. Stroll from there to the nearby Landwehrcanal, however, and you’ll find yourself dipping down into an upended grassy knoll populated by kids, dogs, drug dealers, hippies and homeless. Not so long ago it was a bomb crater. In nearby Freidrichshain houses are still pockmarked by bullet holes, and the Volkspark’s hill is built from post war rubble. To some this may be depressing, but Berliners see things differently. These reminders of a terrible, traumatic past are also symbols of a world that endures. They’re evidence of rebirth in a city that has overcome some of the worst that history has to throw at them.

The Berlin Festival takes place on the edge of the city’s Tempelhof Airport, recently closed and subject to intense discussion as to how best to use the land. Part of Albert Speer’s grand plans for what Hitler intended as the capital of his new Germania, it remains one of the world’s biggest buildings, vast, formidable, shocking in its ambition. No matter that the US took it over in the post-war years: Tempelhof was, is, and – for as long as they allow it to stand, and it’s worth noting that there’s no talk of doing anything else – will remain a potent reminder of the country’s Nazi past. Its use as the venue for a music festival, therefore, is a symbolic act of city-endorsed rock & roll. There’s little doubt that the sight of fluorescent-clad teenagers lying on its tarmac clutching plastic beer beakers in one hand and a joint in the other would have done little to please its architects.

It’s taken time for this event to establish itself in the city, its reputation tarnished by tales of bad sound and low ticket sales in the past, but the 2010 line up, a sterling collection of international acts covering an impressive range of styles, suggests organisers have made a significant push to turn things around. Skipping down the steps from the departure lounge towards the main stage at 3.30pm on the first of the festival’s two days, however, it seems that their efforts may have gone to waste: there seem to be almost as many beer stands as punters, and even amiina – formerly best known as Sigur Ros’ string section, but now six strong, even if their music remains magically delicate – are rattling the canopy overhead that once protected disembarking passengers from the elements. But this is just their line check, and when they return to the stage for their set they swiftly prove that the PA is more than capable of transmitting their fairytale tunes to an audience that seems to be growing at a significant pace.

In fact the festival is sold out this year. Possibly this has been helped by collaboration with Popkomm, the annual music convention whose delegates get entrance as a privilege of their passes, but the suits twirling laminates on lanyards are soon outnumbered by Berlin hipsters sporting neon colours, skinny jeans, windswept scarves and ludicrous sunglasses mined in the city’s flea markets. They wander through the grounds past the traditional festival furniture of food stands, merchandise stalls and organic juice vendors, floating between two further stages in hangars at either end, stopping off at the silent disco or following the mobile one that prowls the security fence like it’s the Pied Piper Of Hamelin. Beyond the perimeter, former runways are peopled with families out for a walk, their kids trailing kites in the sky, a couple of antique planes on display just out of reach. It feels like summer’s last weekend, a final hurrah in bright sunshine, the last chance to tear it up outdoors overnight.

Spread across the three live music stages, the line up proves as eclectic as it does varied in its success. Adam Green, mysteriously beloved of Germany’s youth, might sound like he just rolled in from the Melody Maker Tent at Reading Festival 1991, but he’s wildly popular, and the appearance of Macauley Culkin on stage – singing a stomach churning version of Scorpions’ ‘Winds Of Change’, proving his sense of humour hasn’t improved much since Richie Rich – wins him further inexplicable kudos. On the City Slang Stage in Hangar 5, Zola Jesus, with long blonde hair cascading over an even longer black cape, stalks the stage like a stadium diva witch, wailing gloomily as though she’s got a sponge in her mouth, proving conclusively that reverb and a messiah complex don’t make you sound any more important than you really are. On the main stage, however, LCD Soundsystem provide the kind of party that seems unstoppable, rifling through their record collections to create something startlingly new, and there’s not one single individual here even half as effortlessly cool as James Murphy looks in a simple white T-shirt that clings to what look suspiciously like manboobs.

Elsewhere, though, there’s trouble brewing. At the entrance to Hangar 4 a crowd is backing up as they try to catch some of Robyn’s set, security operating a one in / one out policy enforced upon them by the local police. The problem escalates with Fever Ray’s appearance an hour or so later: it coincides with headliners Editors, whose grim monochrome set on the main stage seems to last longer than my grandmother lived and suggests they’ve not even bothered to go to the source, instead copying Interpol for their each and every move. At the other end of the grounds the same difficulties are also emerging at the entrance to Hangar 5, where Tobias Winterkorn and Elias Araya are making up for lost time, in their case the ten years it’s taken singer Jose Gonzales to find spare hours to complete work on their debut Junip album. Building motorik grooves like a semi-acoustic Stereolab, they’re irresistible even to those who’ve turned up purely because they remember that Sony Bravia commercial with the Kylie Minogue cover, and tee things up perfectly for Caribou, beneficiaries of Berlin radio, which has embraced Dan Snaith’s most recent album and made ‘Odessa’ one of the anthems of the year.

But not everyone’s made it into Caribou, and back at Hangar 4 the crowds have built up even further. With the closure of the main stage at 11pm, the 15,000 strong audience wants to continue enjoying the party it’s paid for in Berlin style, and that means until dawn. Security, however, aren’t allowing people in – Atari Teenage Riot have just performed for their hometown crowd for the first time in years, packing the warehouse to the walls, and now 2ManyDJs are due, provoking angry words from a minority of punters who can’t get to see them. With fears of a developing crush, and memories of this year’s tragic end to the Love Parade still very much in the forefront of officials’ minds, police and organisers reach a mutual decision at 2.30am to pull the plug on the night.

There’s no riot, of course. Berliners leave that kind of thing to May Day. But there are loud grumblings the next afternoon about what’s taken place. Even a 14-year-old, one local DJ booked to play the festival comments to me, would know that if you close the main show at 11pm people will head to other stages, and the space available afterwards should have reflected this. The restrictions, however, were enforced by the police: with a noise curfew in existence on the outdoor stage, and pass gates established outside each hangar area, an excessive gathering of punters was inevitable, if somehow unforeseen by either party.

The solution proposed for the following day is to compact the line up and bring the entire night to an end at the same time as the outdoor curfew. But though organisers desperately try to spread word through the city that everything will kick off early, there are plenty of disgruntled folk who arrive the next afternoon to discover that the running order has been completely revised. Furthermore, Fatboy Slim and 2 Many DJs are amongst those whose appearances can’t be rescheduled. The festival hands out photocopied apologies with the promise of a free event at some stage in the future to compensate, but conversations remain dominated by finger-pointing.

Those arriving in time to catch Edwyn Collin’s triumphant set, however, seem swiftly pacified. Amid a sea of smiles, he looks mildly bemused by the love being shown for him, but proves his recent setbacks have done nothing to diminish his voice, his songwriting or indeed his charm. It’s a modest but inspiring set drawing upon both previous work and his current album, and a welcome reminder of our strength to overcome disappointment. Over in Hangar 4 soon afterwards, there are more nods to history as David Gedge risks RSI while revisiting The Wedding Present’s Bizarro album from start to end, its key singles ‘Brassneck’ and ‘Kennedy’ sounding every bit as excitingly jangly as they did the first day John Peel played them. And back on the main stage Gang Of Four are similarly energetic, though arguably with less panache: Andy Gill is still playing as though the very strings of his guitar have been electrified, but there’s something disconcerting about Jon King, who’s styled himself like a giant David Hasselhoff, a silky blue top unbuttoned to the navel. I’d never thought of the band as big fans of crowd participation, but here’s King conducting handclaps in ‘Damaged Goods’, and any doubts about their former convictions are exacerbated by what seems to be Gill’s decision to answer his mobile phone late into the set.

But, if there’s any lingering sense of dissatisfaction at last night’s problems, they’re getting harder and harder to notice, and Gonzales’ return to his adopted hometown stamps them out entirely. Despite a stage occupied only by two baby grand pianos and two drum kits, he succeeds in eclipsing even LCD Soundsystem’s good vibes with a set drawn largely from his new Ivory Tower album. “I’m a toilet without a seat,” he declares, but he’s not: he’s the disco Scott Joplin. No, he argues, “I’m racist cappuccino.” No, dear Chilly, you’re not: you’re Richard Clayderhouse and Berlin loves you. But Berlin loves Boyz Noize even more, and after he’s joined Gonzales for a couple of tunes he heads over to the main stage for his own set. The Hamburg producer is no more Berlin’s own than Gonzales, but they treat him as a homecoming king, and even though he’s following Soulwax – who, from the sound of ‘E Talking’, which is still playing as Gonzales’ set comes to an end, have turned things right up to eleven – he proves unstoppable, catching a massive audience in melodic snares strangely reminiscent of Underworld’s. Tricky might be prowling the Hangar 4 stage with a giant spliff in his hand, but Berlin’s love of weed isn’t going to tear them away. Peaches might be about to blind us with a laser show that owes a great deal to Tron, but few want to miss out on this spontaneous climax to a weekend rescued. The hangars remain safe, the celebrations reach fever pitch, and organisational difficulties that once looked insurmountable have not only been forgiven, they seem almost to have been forgotten.

So Berlin has its own festival, briefly as troubled as the bankrupt city that hosts it but – against plenty of odds – just as proud too. It might have been easy, only half a day earlier, to predict its imminent demise in the light of its conceptual shortcomings, but as Hot Chip bring things to a close, it’s hard to believe that it won’t return next year, stronger, smarter and, one hopes, even more successful. If the city and its inhabitants have proven one thing over the years, it’s that they’re good at learning from experience, and the loss of a Fatboy Slim show is, in the grand scheme of things, a small price to pay. As Marlene Dietrich suggested, there’s no need to reheat sins for breakfast. Past and present may define the future, but how they do that is the people’s choice. So 15,000 citizens dance through the gateway to Hitler’s Germania, making the best of what they’ve got just as their ancestors have always tried to do, then climb on their second hand bikes and head for the next party. “Ihr Völker der Welt... schaut auf diese Stadt…”

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