In my opionion (and several other's I'm sure), the best place to see live music in Atlanta is Eddie's Attic. It is in Decatur town square on the 2nd level (across from the courthouse). They have a great patio area if you prefer the outdoors (or if you smoke) and the inside music room is just the right size - not too big but yet not too small. Lots of now famous folks have started at Eddie's such as John Mayer, Sugarland, Shawn Mullins & Josh Joplin. Others who've frequently played are Indigo Girls, Michelle Malone, Kristen Hall, Caroline Aiken and one of my faves Cowboy Envy.
It is mostly a singer/songwriter place - lots of acostic musics and occasionally original owner, Mr. Eddie Owen himself will get up and do a song or two (he's very good, by the way). They have a pretty good menu too. I love the Thai Salad. If you go, get there early to ensure you get in - this is a popular night spot and fills up pretty quickly.