When I reach a village population of 50, everything slows down and the villagers are no longer clearly delineated on screen. Is this a memory problem? I do have loads of other applications on my Tungsten T, but can't remember what the recommended memory was on the specifications for the game.
Any suggestions apart from un-installing everything else?

You're most likely seeing the effects of memory constraints. You could try installing the game with only one (or none) of the music files to save space. If you install everything, you're going to need more than 3.5 meg of free space, and that's cutting it close. 4 meg would give you a little wiggle room.

On the palms database is that written as "M"?

Yes, it is. For example, you might see something like "Free Space: 3.7M of 63.8M" when you display Info from the Palm menu. In that case, Village Sim and all of its music files would probably not fit on your Palm.

In the list of applications beneath the free space available, the application size is reported in kilobytes (K), so you have to divide that number by 1,000 to get megabytes (M). For example 3800K = 3.8M.