A unique city and problem for characters to encounter. It can be a great place for a party to be tasked with infiltrating for the purpose of either retrieving a lost artifact or rescuing someone accidentally sent here. (assuming they aren't already infected by the insanity.)
Another interest possibility is that it's not the people that are insane but more an artifact or curse upon the area that's making them act insane. Trying to smuggle someone out to verify this could prove quite challenging, especially if the persons insanities are disruptive or extremely dangerous.