My preference would be a one-level island.

Do you need seating at the island? Do you have a table & chairs nearby?

I like a one-level island so that you have uninterrupted expanse of counter. The uninterrupted counter is more useful in a kitchen that is small as you described.

I have a strong preference for a one-level island. Are you only concerned about resale? If not, then do what you like and don't worry about what others like.

Is it a small townhouse likely to resell to older people? You aren't the only one who likes to sit at a normal height I bet. In this case, I don't think it'll affect resale and you should do what works for you.

I also have a strong preference for a 1-level island, but particular in a small townhouse kitchen -- I think two levels cuts off the room and makes each room seem smaller.

Check out FoxCrane's kitchen - this is a GREAT use of a small space. One of my favorites.

Here is a link that might be useful: FoxCrane's kitchen