I don't pretend to know what really needs to happen. I don't even have many ideas, but I would like to get some concise brainstorming going on. As there is sooo much to dream about in this regard.
So anyway, here are my random thoughts to get the ball rolling.
Keep new content near original towns. No matter how great a town is, if new content goes elsewhere...so will the players. Look at real life when designing towns. Rivervale had a town square...good start! Real towns have them for a reason, find out why (and that's just one example.)
Here's one I really want some attention on, just cause I like it. TAVERNS. THere are a lot of possibilities. From chess games and card games (keep it period please) to songs and dance. The more you drink the more you sing. If you've had a certain amount you have to sing a song or you pass out! Ok, maybe that's a bit much. Have a message board in the tavern, one that can be read just there, or maybe can be read at any major tavern. Or hey, how about npc's that are walking talking boards! Throw in some different npcs that aren't always there, some that pop in looking for adventurers to give quests. Make LFG available only in taverns; that one is probably a bit too much for the masses however. Make tells, guild chats, and all global communications cost something; maybe endurance points and such. If you talk too much you can't talk 'no mo.' But make it completely free in taverns; again, likely more than most would want...but interesting to think on at least.
How about that town square? You want traffic, then put stuff in an area where it's visible and close. Tavern is there, some stables and an inn right next door. Across the street are some meaningful npc merchants (more on that later.) Here are some obvious ones: Bank, forge, alchemy shops, et cetera. Forget the arena of EQ. Guess what's at the one end of the square? A big ole festival/tournament/carnival area. Anyway, just make it like it is made in real life...make it make sense.
Make sure the town has some shady areas. Places you would be afraid to go...especially at night. So much can be done with that. Thieve's guilds, ghetto, et cetera. Post offices! Want to send me a letter? Mail me at eredhel@newtargonor! Jobs, jobs, jobs. Give someone a chance to make money and/or experience as a guard, or someone might scribe spells, or be a merchant for an NPC, or...well that list can go on forever. Here's one I don't think could work without massive abuse, but for the sake of brainstorming I'll throw it out. Faction adjustments based on how much time you spent in a town. Or perhaps based on how many people you hail. No clue here, just thinking of a way to avoid the "afk while I build faction" stuff...along with others. Still I think it has potential.
Improve NPC merchants. Holy cow could we please have a reason to go to a merchant other than selling loot? Let them sell some gear we can use...for something less than 10kpp. Give npc merchants more ways to offer discounts other than faction alone. Perhaps frequent shopper miles . Also make those discounts worthwhile, I'd definitely go back for a good rate.
Here's a problem with something I like. Having different towns for good and evil and factions that keep each other out for the first levels of character life. I like this, I do. The problem is it creates a reason for players to not be in towns. Why do you think the commons tunnel was so...well...common! Not sure what all can be done here, the ideas I've come up with may not do much more than kill the great things that separation creates.
I would like to become sorta living NPC when I make a new character... It will take some time tho, I need to prepare some stuff for him first.