Okay, well...
Yliakum is not a Utopia and I doubt it ever will be... as a true utopia would be one that did not require much of what Yliakum already has (trade,guards,an arena,weapons,currency,alcohol).
Conflict will always exist between characters as there's alcohol, there's greed, there's poverty, there's jealousy, there's misunderstanding and plenty of other reasons to lead to this.
The main impact removing this conflict (if it were even possible) would cause is to detract from the unpredictability (for better or worse!) from RP. Personally, I like a bit of unpredictability in RP otherwise things can end up feeling like a bunch of people are predictably narrating a story line (which is fine in parts, but allowing some things to be open to outside influence makes them more interesting). --- PC conflict can sometimes make the difference between acting out a story-line... and playing a role, imo.