The best smith in town is an elf named Elray, absolutely deadly weapons and excellent armor. You hear various things about other smiths in the village, but when a dwarf smith comes up there seem to be two of them. One of them is Kerfka, who does excellent work on standard items. The other is Rothgar who has a reputation as someone who never settled at all, but is an expert on heavy armor, as long as he doesn't throw you out first.