Here's what i think the ups and downs of PVP would be:
Good:
Can be realistic,as in raiding from small villages is possible and beatable.
Stealing wouldn't be a big problem as you can have police.
Government can jail people.
Bad:
Raids can destroy towns and crops,causing badmins (if any) to ban due to butthurtness
People can beat down others at any given moment.
Town can go into chaos in any given moment,and perhaps will if a rebellion is formed.