Rocket Town can be found just to the north of the cave you exited from near Mount Nibel.
Enter the town and speak to the man in brown staring at the rocket. Keep talking to him and he will tell you more and more about the Shinra No. 26 rocket. Choose to look at the rocket with him and he will give you a Yoshiyuki; a new weapon for Cloud. The Yoshiyuki has good attack power and is even more powerful when one of your allies is KO’d. Unfortunately it only has two un-paired Materia slots so it is of questionable value.
The Weapon Store is on the left side near the entrance to Rocket Town. The only weapon sold there is the Shotgun for Vincent, but you can also purchase Gold Armlets in case you did not manage to steal 3 of them from Green Dragons in the Mount Nibel cave. He also sells the following accessories:
The Item Store is located in the house near the man who gave you the Yoshiyuki. You can purchase all of the regular items (including Potions, Hi-Potions, Phoenix Downs, Ethers, Tranquilizers and Tents) but there is also three new Materia available for purchase:
This is the first time you can purchase Barrier Materia. The Big Guard ability through your Enemy Skill Materia (assuming you have it) is more powerful than a single cast of Barrier so don’t purchase it if you have Big Guard.
Enter the house on the right side of the screen to find a treasure chest that contains a Power Source. The house just north of this one at the back of Rocket Town has another chest that contains a Drill Arm weapon for Barret. Proceed out the back door of this house to find the Tiny Bronco and continue the story. Shera will introduce herself and tell you that you will need to speak with the captain if you intend to take the plane.
Travel to the very back of town towards the giant rocket and then follow the pathway around to the left side of the screen. Ascend the stairs and then climb the tower to the top of the rocket. You will meet Cid inside the ship hallway - speak to him too and you will get the opportunity to name him.
Cid is the newest member of your team.
Make your way back to the Tiny Bronco after Cid finishes telling you his story and mentions that his last hope is to talk to the President. The story will continue once you reach Shera and Cid’s house. Follow Cid out the front door. Travel out the back door to ‘speak’ with Palmer.
Boss Battle: Palmer
Palmer is incredibly easy to defeat. No strategy is necessary for this fight. Focus on regular attacks and keep your party members appropriately healed.
The Tiny Bronco will suddenly take off allowing Cloud, Cid and the other two party members to make a hasty escape out of Rocket Town.
You now have access to the Tiny Bronco which is a plane that essentially functions like a boat. This will enable you to travel to a number of new areas around the map.
The game is not very specific about where you should be going at this point. The suggestion is that you should head to the Temple of the Ancients which you don't yet know how to find. However, if you do travel to the Temple you will find out that you actually require the Keystone in order to gain entry. So where do you find the Keystone? The Keystone can be found in the Battle Square area of Gold Saucer. The only way to have found this out within the game is to have traveled to a small house located on the right side of the western continent. A picture is included to show where it can be found on the map.
The man inside this house will tell you that he no longer has an item called the Keystone which he heard can be used to unlock the Temple of the Ancients. If you ask him where the Keystone is now he will tell you that he sold the Keystone to the manager of Gold Saucer, Dio.
The next destination is to head to Gold Saucer. You can only access Gold Saucer by going through the tram at North Corel. There is no way to enter Gold Saucer through the impassable desert area that surrounds it.
Note that before you head to North Corel and Gold Saucer that you now have the option of completing both the Wutai side quest and the Wutai Pagoda side quest. You will only be able to complete the Wutai side quests on Disc 1 and Disc 2. The rewards are not bad ( MP Absorb Materia, HP Absorb Materia and a Magic Shuriken for Yuffie) and if you are interested in completing all aspects of the game you will have limited opportunities to complete this portion. You can also complete the Turtle's Paradise side quest now as well (assuming you found all 5 of the flyers outside of Wutai).
I recommend that you do try to complete the Wutai side quests now. Click on the links below for more information:
Traveling to Wutai
Retrieving your stolen Materia from Yuffie.
The Wutai Pagoda
Battling against the five Pagoda guardians to obtain Yuffie's strongest Limit Break, All Creation.
Click next button below to continue the regular story which continues at North Corel / Gold Saucer.