Dragonstar is a city-state in Hammerfell, just south of the border with High Rock and Skyrim. The city was once home to a gladiatorial team known as the Sacred Rage. During the War of Bend'r-mahk, the forces of Skyrim advanced into Hammerfell and besieged the city. The situation has persisted to at least 3E 432.
The city is divided into western and eastern sections, walled off from each other, each with their own government. Dragonstar East is still under the control of Hammerfell, while Dragonstar West is predominated by Skyrim. An atmosphere of deep mutual distrust prevails between the two sides. The city has an arena pit, a prison and guild halls for the Mages Guild, Fighters Guild and Thieves Guild. Shadowgates can also be found in the city.
(Excerpt from the http://www.uesp.net/wiki/Lore:Dragonstar.)
I'm thinking that this city-state could be an incredibly solid idea for a city-focused plot like Mournhold of Morrowind, and it even revolves around a Gladiatorial Arena which makes it logical to add an Arena to the game and even a bunch of new exotic weapons. Furthermore, Dragonstar even sounds fitting to the main plot of Skyrim and it's constantly being argued over between Nords and Redguards (allowing for factional conflicts).
Personally, I'd love to see something like this. What about you guys? Discuss!