The Campaign Builder's Guild

I also applaud your move towards city-states.  Snargash's notes (and a good Breakdown of some of the best of 'Guns, Germs, and Steel') about resource management and trade routes was nice.   His earlier comments about the racial kits from 2e is more in keeping for what I like to do with character bonuses.
what type of steed do the nomads ride?

The nomads don't have steeds yet as I am unsure how best to implement that just yet. The resource thing is interesting. However Northhaven in general is a major traders stopover so I could see its cities flowing with trade goods, especially ores since I do want to make them prominent smithy locations.

As to race creation this is a bit difficult for me, I have never dabbled much in creating races or creatures so I am a bit stuck with what is an ok level to put them at. Any ideas would be appreciated. I will look over the links given of course though. Its just a process that I may end up needing help with.

This is tough so for the time being I will simply work on the fluff. Crunch will hopefully come about after I have the fluff in order. So please ignore the previous statements on racial bonuses for now. However I am open to your interpretations of how best to turn this fluff into crunch.

Paolis/Paolian (Pow-lees/Pow-lee-an)
The Paolian peoples are descendants of the first settlers to Northhaven. They are a pragmatic group who generally see more importance in utility than beauty. This echoes through their culture, even back to the days of the arrival. It is said that when Edward Pike founded the town of Pikes Point, the first thing placed wasn't a statue or a flag, but the foundations of a wood mill. Their utilitarian outlook continues on even today, long after the government of Denkirn failed and left the Paolian cities to fend for themselves.
The primary Paolian settlements echo their builders pragmatism. The grandest buildings within their walls are not the palaces or churches, but the forges and mills. This has not gone unnoticed by other peoples and the Paoli enjoy a constant influx of travelers and merchants, many of them eager to make use of their vast industry.

Culture:
The Paoli place great importance on hard work and slothful tendencies are greatly frowned upon. By the age of five Paolian children are maintaining the home while their parents are hard at work, commonly at one of the vast workshops. Generally the children have been apprenticed to a master of a craft before they even reach puberty. Apprentices work in large groups under their headmaster, attempting to master their chosen profession. Most succeed in becoming general craftsmen of their chosen school, however a select few can find themselves quickly climbing the ranks towards a headmasters position of their own.
Meanwhile, in the ranks of the nobility can be found some of the hardest workers of all. The noble families got to where they did through diligence and great effort put towards their community. Nobles who show lazy tendencies can quickly find themselves without a title. As a whole they are generally brought up as overseers. As an overseer a noble is required to take part in the most dangerous jobs and to be available as often as possible. Their stations pay well and are a great honor to hold, but a great burden is placed upon them to uphold the traditions of society. Many nobles have given up their positions because of the overwhelming responsibility.

Appearance:
The Paoli tend towards a lean yet rugged appearance. By adulthood most Paolians have well callused hands and somewhat tan skin. As a people they tend towards darker hair, especially black. The men normally keep their hair trimmed short, including their beards which are rarely more than goatees and simple mustaches. The women however grow their hair out straight and long, normally tying it up with cords into simple buns or ponytails. Their eyes are generally dark like their hair, browns and dark greens are prevalent among the Paoli. Clothing in Paoli society is like the culture, utilitarian. Even womens dresses are adorned with hoops and pockets for holding tools and items. Colors are generally basics such as brown and gray and others that don't show wear and dirt as well.

Settlements:
The Paolian people have since spread out and they can in some shape or form be found in nearly every city on both Northhaven and Kharoyl. However their culture is most prevalent in Western Northhaven, especially in the cities that their ancestors first founded. After the founding of Pikes Peak the Paoli expanded southward, founding the settlements of Ridgetown, Grayhollow, Hastebay, and Glensdale as well as numerous smaller settlements. The opening of the pass led to the destruction of most of them. All that remains are the grand cities with the exception of Grayhollow, it having been overrun by wurms. Much time has passed, yet each of the Grand Paolian City States still retains its utilitarian architecture. This has lended the area a unique feel not seen elsewhere.