Hello. I'm also new here (downloaded VXAce Lite a mere four days ago) but I am an experienced writer, so I thought I'd give my thoughts on your question about character and town names. Also, as I'm getting into VXAce and exploring what it can do while I start putting together my own game, I'd love to take a look at your games, and I'm willing to give feedback if you wish.
I don't know what the setting of your game is like. If it's real-world, then you need to do some research. Wikipedia has a fairly good series of articles on naming conventions of different cultures (type in "Japanese name" or whatever). Even if it's another world, you may want to use real names to make the reader/player feel at home (think of Tolkien's "Sam" and "Merry" -- and notice how they contrast with other cultures in the same work, enhancing the feeling that one is familiar and the others are more alien). It may seem like cheating, but it isn't. Your dialogue will be written in English, even though England doesn't exist in your world, so you're pretending that everything was originally said in another language and you are acting as translator. In that case you have the choice whether to translate names into real-world names to preserve that sense of familiarity.
One thing that's easy to do when using real-world names is to identify characters as outsiders. Say you having a trading port where most of the shopkeepers have English names, and then the blacksmith is named Masashi. The player should understand that he came from a distant place in your world.
If you don't want to use real-world names, or if you want to have one particular culture that has non-real-world names, then in essence you have to invent the language of that culture. You don't have to flesh out the language enough to be able to translate sentences, but at minimum you should have an idea of which sounds and sound-combinations are possible in that language and which are not. (For this kind of thing, I thoroughly recommend looking up zompist's Language Construction Kit.)
When you have a phonology, then choose a consistent system for transcribing its sounds in the Roman alphabet. How you do this is up to you, but there's just one piece of advice I want to give: treat apostrophes with extreme caution. For example, if you've looked at the example game
Chrysalis, one of the characters is called Cha'ya. The apostrophe is not pronounced; it's just there to mark her culture as more exotic. The other names from her culture also have apostrophes sprinkled at random, as though they were a kind of flavouring. No language in the world does this. Even in English, where spellings are often divergent from pronunications, there are historical reasons behind the spellings. (You might come up with a language that has a legitimate reason for using apostrophes, but in fantasy it's used so often as a lazy shorthand for exoticism that many readers will just assume you're doing the same.)
I'm procrastinating from work on my own game so I'll have to leave off. I hope I helped at least a little
