I like this! Some sound effects would really take it up a notch, as would some kind of post-game explanation as to why you won or lost. Even just a little cross through any village that was lost would be a big help.
I completely forgot that villages couldn't be "isolated" until I skimmed through the comments here, and I'm still not certain what "access to another village" means: I'm assuming it follows much the same rules as the river movement (in that villages can't be separated by forest) but it isn't made obvious in the instructions.
Also, just seconding the idea about turning this into an app. It's exactly the sort of chilled-out, non-time-sensitive game I like to play during ad breaks on TV.