I guess I've been summoned.
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If you haven't already, you should download and install sketchup. It will allow you to edit and place multiple objects together. A word of warning - merging many high detailed models can be hard to work with.
http://www.sketchup.com/download
I use sketchup for 3d printing. It's a powerful program once you get into it. Have a look at some learning videos
http://www.sketchup.com/learn/videos
^ This, essentially.
I'm still rocking the last Google version of Sketchup, so I don't know how Trimble have changed it, if at all, but it's fantastically easy to use, and you can churn out a very basic town (layout, cuboids for buildings so you have sizes and placement, etc) in next to no time - it's as simple as drawing a 2D rectangle (or a custom shape using the line tool) where you want the building, and using the extrude tool to make it a 3D object. What's great is that you're not tied to arbitrary computer measurements, and can define lengths and depth/height in centimetres, inches, metres, feet, and so on.
If you want to do something more detailed, Sketchup is still perfect. 3D models are simply collections of 2D shapes (polygons) arranged in 3D space, and Sketchup, at its most basic, is a tool for drawing 2D shapes in 3D space. I've spent days building complex models that I have a tough time drawing, and after trying a lot of different tools (Sketchup, Blender, Daz, 3DSMax, Maya, Lightwave), the one that let me build what I wanted without having to go through enough "Getting Started" tutorials to earn a degree was
Sketchup.
I'm constantly amazed by how powerful Sketchup is. What's great is that it's even available for free (
Sketchup Make).
EDIT: Of course, to mirror what Glitch said, Sketchup may be powerful but very high detail models can pose a problem. But we're talking stupidly big models (hundreds of thousands of polygons), so light users are unlikely to face such problems.
The only thing you'll have real difficulty doing in Sketchup, are complex curved surfaces (spheres are fine, as are half-spheres, and curves that follow a line. If you want a surface that isn't a uniform curve, the easiest method I've found is to manually draw curved lines that outline the shape, and create the polygons by hand), which is where a tool like
Blender excels.
And if you want to create a scene, or a character model,
Daz is what you should use (it's been a while, but I think you can create the 3D objects for the scene in a program like Sketchup, and import them into Daz).
As an interesting aside, we do have a thread in
Technology where people have been showing off 3D models they've made:
http://www.sffchronicles.co.uk/forum/46907-show-us-your-3d-models.html
EDIT2: Something I feel I should add, on the subject of mocking up a medieval town - in Google Maps, Google used Sketchup to create basic box models over which they overlaid a photograph of the building they had modelled. You should be able to do that yourself in Sketchup (that is, assuming you don't care about everything being flat).
EDIT3: Oh!! Sketchup also has a pretty cool "view" feature, that allows you to walk through your model with your keyboard - the camera is positioned at eye-level, and your models are scaled to the same size (so if you created a six foot tall box, the top of it would be just above the camera POV). I love designing a city, or a boat, or a spaceship, clicking on the walkthrough view, and strolling around my creation.
EDIT5: And a few more threads about 3D modelling that we have:
http://www.sffchronicles.co.uk/forum/46123-3d-modelling-characters-races-and-stuff.html
http://www.sffchronicles.co.uk/forum/43538-3d-modelling-google-sketchup.html
http://www.sffchronicles.co.uk/forum/532678-3d-but-i-just-want-to-look.html
The second has images of more models that people on the forums have made. I've quickly skimmed them, and all the information in the three threads looks relevant still.
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EDIT4: I should probably answer the question, too.
You begin by downloading Sketchup, obviously. First thing you'll probably want to do is create a filled rectangle (rather than the four lines for the outline) onto which you will place any buildings you download from the 3D Warehouse - this is simply so that everything is on the same 2D plane. Of course, if you want things at different height, you can add more rectangles (maybe even draw them on the original and extrude them up or down. To extrude to a certain height, click the extrude icon, click the plane you want to extrude, then type how much you want to extrude by, including units. So for six and a half feet above the horizontal plane, you would type: 6' 6", or 6 1/2'. To extrude below the horizontal plane, just add a minus: -6' 6").
Then import your downloaded model, and use the Move tool (four arrows in a + shape) to move the model around. You'll quickly figure out how to snap it to the rectangle you drew for the base.
EDIT6: It turns out that once upon a time I made a post about some of the basics, if anyone is interested:
http://www.sffchronicles.co.uk/forum/1058805-post23.html
