Actually, it would be a good idea to have everyone start in the same city - I think this is why SOE started with the "Mines of Gloomingdeep" where everyone starts out.
when players started to drop from the servers, they "bundled" them up into one zone, so the few players that were left, would find people to play with.
In our case, even a server with 40 players, is not much and they can get lost on all the towns - why not start them all in the same town, maybe cycle the starting town every so often.
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