Where should my town be?

Perhaps use the "/wild land" feature in game.
I recommend looking for one in our newer world - Rising

 

I'd try and locate it near a friends town, being able to use each others town features would make your life much more easier.

 

There is more available land primarily.

 

Also Rising has all the new 1.7 biomes, unlike Legacy, so you'll have more options if you want it to be in a specific biome.

 

You can put it next to mine if you would like some help running it.