On to issue 8 of The Dragon, featuring an article by Tony Watson about the creation of towns.
This is an excellent article, one I intend to use immediately in the fleshing out of my current campaign setting, the city of Cyrilsport. Some highlights:
Watson begins with the obvious considerations of a town's size, location, and surroundings, then discusses the sectioning of the town into various "quarters." He reminds us of the most common features seen in fantasy town maps, like open markets and temples, but also brings up features that world-builders could easily overlook, like barber shops, cobblers, and cartographers. He offers simple rules for services-for-hire (e.g. cartographers charge 100-600gp per overland map, depending on remoteness of the location).
Watson completes this section with a recommendation to keep a town directory. A modern GM could easily add entries to his software database (Earlier I mentioned Bento, which is sadly discontinued. Now I use FileMaker), along with all other NPC's and items in his campaign.
This is where a GM could easily lose herself in the town-building process. The author suggests a method for quickly generating NPC's using randomized traits, and then instructs us to keep their stats in a notebook. GM'ing is always a balance between prep time and game time, and with modern database technology I'd say skip this step, use your imagination (and a random name generator if necessary) on the spot when you need an NPC, but then remember to log them in your database.