Fun little game - really enjoyed it.
Some suggestions:
* Something other than the color-tinting for the time-of-day. I'd like to see the stars come out, the moon go up and down with the sun, etc. (Maybe you could do one of those "sun/moon" dials like you see on grandfather clocks in the background.) The town should grow dark, but the lights in the buildings should glow. The throne room could grow dark, but still have light thrown by torches. Etc.
* The lifeblood of this game, I think, is the set of decisions that have longer-term effects than just that one decision point. Recurring characters, town improvements, quests, etc., are what felt the most compelling about the game. You should add more of those.
* For replayability, I think you should have some of those decision choices be "branching", in the sense that if you, say, hire the witch, then some other character leaves town, and if you do not, that character stays and has its own effects. That would give you different characters on subsequent playthroughs, and also introduce an interesting meta-game where people try to decide where they want their kingdom to go based on the effects of the characters.
* I like the reports that show up that annotate the effects of your decisions at the end of the day. I think you could add interest by just having more of those, even if they don't change the effects. For instance, if you hire an exterminator to kill the bugs in the garden, you could dock the money immediately, and then show a placard in a day or two indicating that people are happy that the garden is free of bugs now. (More of this will also make it a little less obvious what the "correct" answer is, and make it feel like your decisions are more weighty, even though they have exactly the same effect. It would also be a nice opportunity to show a little drawing of the garden.)
* The people walking in and out so slowly gets a little tedious. Maybe speed that up a bit? And perhaps start the next person walking in when the previous person is leaving instead of having one person leave completely before the next person starts walking in.
* It would be nice for the king to be animated, giving thumbs-up and thumbs-down as part of the answer, or maybe nodding and shaking his head.
* I liked how the town was built up in the background over the early game, but it very quickly became static. Maybe just ramp that animation over a longer period of time? Or better yet, find a way to integrate the granaries, the gardens, etc., into the view of the town.
Anyway, that was a really fun little romp. Interesting how just yes/no questions led to some compelling gameplay.