I've got really bad performance in cities when moving around, even on the lowest quality setting the game stutters. My system should be more than enough to handle the game:

Core 2 Duo E8400
ATI Radeon 5770 1GB
4GB system memory (only 3 accessible due to XP)
Windows XP 32bit

Are there any tips to increase performance? It seems to be linked to the number of characters onscreen/popping in, since the cities stutter much less at night.

If you're talking about the trade quarter it's normal. It's the game that was made that way even me with a gtx 480 i drop below 30 in the trade quarter

Yep, it's normal unfortunately. Disabling auto save may help a little, and lowering other settings like grass, animals, etc., but not much.