If you are looking for people to join your village, go to the inns at all the villages. Walk in and out until you see someone walking around. In Falrod, they are in the church and in the inn. This will soon progress your village far, but do not forget to check on it every once and a while. You can find three priests, two nuns, three normal people, one cat, two fighters, one pig, two old people, and one musician. There is also a person that will make special statues of your people in the sixth village you go to. However it takes a while to find him. He is not at the inn -- he is around the village.