The Chinese history have witnessed several times' prosperity of the small cities and towns. However, people' s awareness towards its importance is not enough and the related development strategies are not yet systematic. Although the fifth plenary session of the 16th CPC conference calls for the construction of new socialist villages. Still some experts tend to think that the priority should be given to the development of highly-efficient big cities. As a response to these viewpoints, this article mainly elaborates on the problems regarding the functions and developments of small cities and towns as well as its counter-measures.