When you first get here, everything will be blue except for some of the people. These enemies called Mad Cultists are also running wild. The look like a tube of Blue Paint. There is an inn that you can't use unless you pay $50, but this will be fixed at a later time. This is also where you first "meet" Paula, and when Pokey will decide he doesn't want to be friends with Ness anymore, due to Pokey playing an important role of Happy-Happyism, which was ended by Ness. There is a lady standing at the entrace to Happy-Happy Valley, and if you do not pay a little bit of money, she will walk around following you until you enter a cave or house. This repeats until you have defeated Mr. Carpainter, who has basically brainwashed everyone in the area. Afterwards, she will just say I'm sorry, and she will leave. All of the buildings and people will revert back to normal, and the inn doesn't cost anything.
There is a quick way to make money in this town, and it takes little time. Before Mr. Carpainter is defeated, there is a food stand near the entrance to the cave of the second Sanctuary. This gives free items (although you are technically stealing), and there is a fresh egg to be found here. Wait some time, and this egg will become a chick, then a chicken. The chicken can be sold for $110, so this is a fast way to make money.