Back to the topic at hand:
The party first move should be to rend Kurosawa's The Seven Samurai. Preferably on DvD, since it's a long movie. Then they should go find seven samurai.
Seriously, what I mean by that is that I agree that the townfolk have to pitch in. The samurai in the movie faced the same problem with the townspeople. "Hired us to defend you, eh? Okay, the first step is we'll plan your defenses and show you how to fight." If they're saying they'll only fight if the kobolds get into the town, well, I can guarantee you they'll get into the town right away if nobody's keeping them off the walls, so you might as well start there.