You're spot on, and I've wrestled with this, and in at least two cases it's why I didn't get some sponsors who I'd contacted.

I'm about 90% certain we will be doing a separate 'sponsor room' this year, where sponsors will have their own tables/booths and can interact with people, it just won't be in the main hallways. I've seen it done well at a couple other events recently, and I think we can use that format, which means we may attract a few more sponsors this year.

The key is to serve the coffee/snacks in the sponsor room.

Another thing I've seen work well is run a competition with a small prize than involves attendees visiting all of the sponsor tables. Run it at the same time as a coffee break. It's fun, folk who don't care can opt out, gets a bunch of folk some face time with sponsors.

Also, on the schwag front, do what you can to persuade the sponsors to give out useful schwag. For example I've got a stack of branded retractable sharpies that I use every day. Somebody gave out some nice branded planning poker cards one time that I still have and use. Somebody else gave some nice single-card summaries of innovation games that I kept.

The bags, frisbies, pointless brochures... not so much.

Very important, though once you hit a certain size, it gets hard to keep everything on one floor (most people won't believe what hotels will do to cram multiple events into their venues).

You can offset the need for spreading out the coffee by having a fancier snack station in the sponsor room.

One big draw to the sponsor room (especially for summer conferences) are free ice-cream snacks. We had lineups to get into the sponsor room.

Can't upvote enough. Also great if sponsors want to be specifically involved in that process - they can directly see people using what they paid for and do something compatible (at PyCon this year, the Heroku booth had comfy couches where people drank coffee and talked with smart people - I'm certain everyone left with a positive impression)

Upvoted! ;)