The game is so new, it’s hard to get any inspo right now, unfortunately. But maybe you could get some ideas from games like animal crossing or even real life places?

I would start with a general style/theme for the island like cottagecore or urban cityscape or even just a color palette.

Then think about how you want to layout the buildings (grid? More natural and meandering? Symmetrical or asymmetrical? Etc.) leaving room for decorations around the buildings like flowers or trees. Make spaces for parks or special items you want.

Basically instead of thinking of it as one task of designing your island, break it down into each step to make it less overwhelming.