The City Part of Town Puns

You're in a large city with a great port. You're in a nicer part of town, away from the water, in a nice inn. You're having a meal of potatoes. You look down - there's a toe! The toe smells like tar and fish. It stinks. Your neighbor leans over and says, "P.U.! That's not just any toe!! That's a portmanteau!"

This is not so much a request for a pun. I had heard that there was a town in the Scandinavian region that was known for their puns, and that this was recognized throughout the country. This was a part of a larger conversation about puns in general and the fact that they are typically frowned upon in english, while many other languages celebrate the pun, and are in fact more pun-prone due to the structure of the language.

However, I cannot remember where I heard this, I believe it was a podcast, but I cannot recall.

So, what cultures celebrate the pun, and do you know of any cities or towns known for their puns?

Thanks :)