Something that size would be possible I guess, but to have a possible minimum of 3 for a town... that doesn't fit right. And I think to a degree they should make the sizes of towns dynamic and not set so like here's a town and here's a city, they are totally different, so much that you can have smaller towns with under 10 houses but also some larger ones (like Dawnstar) with 20-30 houses (assuming the cities have more than this, which I really really hope). Like how they had Caldera in Morrowind, which was the link between cities like Sadrith Mora and towns like Pelagiad.
Well I suppose it depends what you use to measure something as one or the other. Pretty sure here in Britain it's this.
If it has a church it is a village.
If it has a public toilet it is a town
If it has a cathedral it is a city.
However, I am aware this isn't a set definition, we would probably be best going by building count or some other marker building. For instance,
tavern - village (small settlement)
shop - town (I'm aware villages can have towns, but in this game, I honestly don't think small settlements should have shops)
??? - city, perhaps some central governing building or something?
Of course they could have varying numbers of buildings, but these things are generally built when a certain number of people are present. No sense building a shop where there are only 5 people to buy anything from it.