I am so not a fan of ToonTown. I think its a boring area of the park, and more of a "play area" for kids than a real attraction. I really would love for them to do something else with it, but there are a lot of logistical reasons why it would make it difficult/impossible.
Someone else already mentioned the fireworks. Its not that they are uncomfortable with guests in the area, its that its a legal issue. THey legally have to shut down to shoot off the fireworks, which are shot off from just behind toon town.
The second issue is all of the backstage areas. Entertainment, janitorial, and fantasyland offices are literally, I mean LITERALLY right behind the walls of toon town. So you have to create something that isn't disruptive to that.