Right on! There are endless great little spots for chilling and hearing music...what type of music/club are you interested in? For starters if you want to see a variety of artists a good place to start is a place called Babylon. It's a bar/club but they usually have well known artists of all sorts of genres there..

go to isteklal caddesi (street). if you start out at the top of tunel and start following the trolley tracks, you'll see one little road on the right, and then the next road (going downhill) is galipdede caddesi. that street has the heaviest concentration of musical instrument shops. many drums, and better quality than in the bazaar. visit sound fabrika studio for lessons and sat night jam. (soundfabrika.com, i think)
then, to find music, you go back up to the trolley tracks and walk. in the evenings, there will be lots of good street musicians. if you go left into balik pazari or cicek pasaji (clearly marked) you will find cafes with bands. you will hear them from the street, so you can pick one. these bands tend to be more Rom. be carefull of the cafes, tho. don't be shy about asking the price of everything that is brought to your table. it's gotten pretty bad there lately, like kumkapi. be especially carefull of a restaurant called 'degustation'. they tried to charge us 260 lira for 3 beers, a couple fish, and four meze.
Further up isteklal (where the trolley tracks are) you can start to wander (not too far) down some of the side streets. you may hear music coming from bars, and you will often see signs that say 'bu aksam' (this evening) and have a picture of the musician playing.
not too many dancers in this area. galata tower (down galipdede) has a show, but i can't recommend it. it's hard to find good belly dancers. many restaurant dancers are shimmy shimmy right, shimmy shimmy left, good bye.
go to unkapani for cd's. for bigger, cheaper dance costume shops, go to the back courtyard in the covered bazaar where you see the sign that says 'pedaliza'.
more info for the music and dance lover in istanbul can be found at turkuguide.com.
have a great trip! you're going to love istanbul.