Wow, that's tough!
I like how Harmonica Town has a lot of new cool locales: an actually semi-functioning school, a photo studio, a mine, the Wizard's heart-reading place (I know it's his house, but it might as well be a fortune-telling shop)...
I think the Waffle Town Hall was nicer. The Town Square was nice, too, and a good setting for festivals, although ToT's Town Square festivals weren't very exciting.
But I like the Church better in Harmonica - very pretty.
Both towns are good in that they connect to a lot of other areas of the island: in Harmonica's case, to the Farmland and to the Church / Garmon mine cart; in Waffle's case, to the Farmland and to the Maple Lake District (with multiple paths to each = bonus!); in both cases, the pier to Toucan Island.
But the placement of Waffle Town's pier is more convenient (closer to your house), rather than Harmonica's pier at the far end of everything. Also, riding the boat was FREE in Waffle Town... xP;
Harmonica Town's multiple levels of buildings that you have to climb stairs to access are kind of weird when I think about it; Waffle's layout made more sense.
Harmonica Town from afar looks all cute and pastelly, almost like some kind of dollhouse, which I guess I like, but then Waffle Town's more subdued yet still colorful design is probably more believable and maybe more overall "towny." Also, if you look closely in the game, Harmonica Town buildings sometimes have these ripped/faded posters on them. I don't usually mind them too much seems like a weird reverse-final-touch, making the place look LESS cutesy and homey...
I don't know what to pick; I happen to like AP overall better than ToT, so I'd probably say I'd rather live in Harmonica Town... But then, Waffle Town does have a lot of advantages.