Merridia

[Moe]

First of all: I like the 2005 version, I love the 2010 version and I will keep an eye on the 2011 version

To your question if the city is big enough:
EDIT: Calculation wrong - see next posts

Quoted the
Magical Guide to Medieval Societies

Medieval towns and cities are small, usually less than
a mile in diameter, and rarely grow larger than a few
thousand souls. Most urban environments average a
population density of 20-60 people per acre. Larger
cities, royal cities, or cities on major trade routes have
higher growth potential because of the amount of
money flowing through the city. Population density in
these cities is as high as 200 people per acre.

You want to have 20,000 people so you had ~19 / acre.
When my quick calculations are precise enough (lots of rounding) there is some space for more inhabitants, or you could adjust the scale.

It depends much on the type of city. As said before I will link to the guide.

Have to go now and will update soon,
hope this will help you a bit

I'd love to know more about the background story (is it in German?)

Kindly,
>Moe

EDIT: Links inserted