If you talk to the NPCs in the township they will explain that there is fighting up in the palace between the forces of the twin princes and the town guards warn you that they cannot protect you if you go up there.
I had a quick peek at Dune and it sure is a great change since last time I was there I only dared peek quickly inside the palace gateyard, the townfolks had, as you say, not much positive to say about spending time at the palace.
Overall it has a very nice feel this town, it might even turn out to be my favourite!
Cheers!