Tons and tons of stuff to do in Pagosa Springs. It will be hot in August, but you can find higher ground to cool off if you need. Just a couple of recommendations:
1/ Drive to Wolf Creek Pass -> great views & you can walk part of the Continental Divide Trail up there
2/ The Hot Springs! -> What Pagosa is famous for. Go for a soak in town!
3/ Chimney Rock -> Cool rocks plus an ancestral puebloan ruin just west of Pagosa Springs
4/ HIKING -> Simply tons of hiking around the area. Stop at the Forest Service in town and ask for some maps
5/ Cumbres & Toltec Railroad -> Billed as the Longest Highest, most Historic Narrow Gauge Railroad in North America. You can catch the train from Chama on US Highway 64/84, ~50 miles SE of Pagosa Springs.
NOTE/ If you go ~60 miles West of Pagosa Springs you'll get to the Durango-Silverton Railroad which is an equally enthralling ride.
6/ Rafting -> Go rafting on the San Juan
Plus eating, hanging downtown etc....ENJOY!