OK sketches I'll get on that. The turtle is not unique, there are several of them. Each has a standard route that represents a major ocean basin such as the pacific rim, the Mediterranean, or for a young turtle god the gulf of Mexico. The towns on them compete mainly through trade. The turtles themselves avoid each other rather than going to pathetic turtle battle. I was thinking the death of another one has altered this ones route to new lands less known by the inhabitants of this turtle, thus new possibilities for trade and as its for and RPG ultimately adventure. Who knows what other new and exciting animal gods they can't meet along the way.
Defense of the town will be a real issue, it not only moves but lingers at times (both to feed itself and allow for adventures without your down moving on without you) and its route is predictable enough to allow trade meaning anyone who doesn't like you has time to prepare for your arrival and only needs a fleet of small boats to get to the city as it comes close to shore. The turtle isn't in much danger a 60' wooden spike at the size I've laid out is still shorter than a thumb tack as far as trying to ram the turtle and its made of tough stuff (though not as tough as it would have to be for the weight of its own skin not to pull off its bones if real physics applied but clearly we are ignoring those to allow for a several mile long turtle you can't make me think of the cardiovascular nightmare scaling up a creature this large would lead to). As a off idea for defense I was considering maybe having mirrors shine light on the water the sparkle catches the turtles eye and he thinks there is fish there and turns in that direction. Its not going to make him steerable in the long run just get him to face an enemy, but that might be overly gimmicky. Most ancient navies where extensions of merchant fleets (Venice is a great example of that) and as the turtle is accompanied by a large fleet at all times to move goods to and from shore and fish the navy idea seems a natural extension of this.
Looks like using just run off with cisterns to collect it a city of good size could be supplied, which makes sense as that's all that is happening on land in the long run. I'm using Ventotene as a rough estimate (just because I remembered the story of the exiled Roman princess and that they had to collect rain water there). The estimates of water use per person per day in medieval society seem to fall into the 3-5 gallons per day range. As the shell is impervious to water that leaves a good sized collection basin, not sure if anyone is better with these number than me, but I'm going to assume the turtle travels in fairly wet conditions as coasts tend to be giving ample opportunity for rainfall to collect and making building for rainy conditions a necessity.
I considered making the shell a resource too, one that has to be carefully used as you don't want to give the turtle an itch by cutting away too much. It would be a super hard material a bit hard to cut but great for armor pieces and the like being divine turtle shell. Not sure if that's adding to much economic factors in that I wouldn't have to track and consider later on.
Probably going to make the turtle in turtle fashion dislike others of its own kind, though I think the idea of a flotilla of baby turtles is adorable and you should make that right away so I can see how your turtle city turns out so I don't feel bad about not using that awesome idea.
Edit: If I start liking all the great ideas and points people are throwing out I think I'd have to like every post here. You people are great.