This is how I would design a database to solve the problem - unfortunately, this may not be appropriate for your particular situation.
This design ensures that: names of towns are unique within a given country and region. plus it can support all the information that the original design could provide. I have run this sql using psql in pg 9.1beta2, without any errors being reported.
Note you will still need business logic, in a trigger or some such, to ensure that only one town within a given country and region is marked as the name of the town rather than as an alias.
CREATE TABLE country ( id character varying(3) PRIMARY KEY, name character varying(50) NOT NULL );
CREATE TABLE region ( id character varying(3) PRIMARY KEY, name character varying(50) NOT NULL );
CREATE TABLE country_region ( id serial PRIMARY KEY, country_fk character varying(3) REFERENCES country (id), region_fk character varying(3) REFERENCES region (id) );
CREATE TABLE town ( id serial PRIMARY KEY, country_region_fk integer REFERENCES country_region (id), is_alias boolean DEFAULT true NOT NULL, "name" character varying(50) NOT NULL,