The safest thing to do is to back up your savegame file (VillageSavegame.pdb) on your PC (or in another safe location on your Palm). It's very small (about 5KB). That way, if anything goes horribly wrong when you delete the 'extra' copy of the game, you can recover back to where you were. If you don't have a file manager and use the Palm's delete function to remove the duplicate copy of the game, it
will delete Village Sim AND your savegame. Better safe than sorry!
