I mostly left the houses where they were originally, but with that said, I placed Tina's house (newspaper carrier) underneath Rebecca's. For the salon I removed the barrels and fencing to the north of Emma's house and put it there, and the garden can go on your farm as well as in town, and I put mine in the lower left corner. --- http://i.imgur.com/ZCcGe.gif http://i.imgur.com/Hkndg.gif
I had the same problem fitting things at first too. What I found to be helpful was picking up the dirt road pieces and then moving all the houses. Along with what other people said too, like cutting down the trees and stuff.
just a random question, do you ever unlock like another part of the town like you did in Island of Happiness? cause right now it doesn't feel like all of the buildings will fit in that tiny area --- 3DS FC: 1676-3725-4140 (msg me if you add me)