Somehow, your old savegame is being picked up by Village Sim when you load it. There is like a stray savegame file lurking in your device. That happens sometimes if you're running the game from an expansion card and your device gets reset while you're running Village Sim.

Since you want to start over anyway, delete the Village Sim application from both your Treo and the SD card using the Palm OS delete function. Then reinstall Village Sim (to the SD card, if that's where you want it), register it, and then start a new game. You should be fine after that.