|Think it's an eeeeeevil castle? Bet it is.|
The standard D&D setting is often described as being "points of light in a sea of darkness" — tiny patches of civilisation surrounded by evil monster-infested wilderness. But even those patches of civilisation are often portrayed as suffering from either an overt or covert rottenness. It does has the advantage of giving the characters lots of things to fight without having to go very far, but it would be a depressing sort of world to have to live in.
I can't think of a single example, in a RPG setting, of a Utopian society that doesn't have some dark secret beneath it.
It's true that such a setting would be pretty dull, from the hack-and-slash point of view, if that were all there was in the milieu. But surely there's no reason why such a place couldn't exist somewhere in a made-up world, if only to provide a contrast to all the other sinks of corrupt viciousness.