This is a fun thread over on the forums, and though we've talked about favorite cities a few times before, I like the use of the word "settlement" -- it seems different enough from "city" to consider separately. Your favorite city brings to mind images of metropolises like Stormwind or Orgrimmar, but "settlement" could mean anything -- the Mirage Raceway, way out in the middle of Shimmering Flats (those Goblins probably live there, right?), or the Arrakoa camps around Terrokar Forest. "Settlement" opens up the question a lot, from the biggest cities to the smallest huts on the outsets of Azeroth.
So what's your favorite in-game settlement? Booty Bay and Loch Modan get a lot of votes in the thread. Personally, I kind of like the Westfall Brigade Encampment up in Grizzly Hills -- it was fun wandering around there and seeing the old faces from Westfall. Back in the old world, Lakeshire holds a little fascination for me -- it was the first time in the game that I was out of Elwynn and starting to realize just how big the world really was.
What about you?