Yes, it would be nice but vehicles DO need to be able to drive around too. King Street is already quite restricted for vehicles and as of 2022 The Esplanade will be similarly blocked-off to prevent through vehicular traffic and allow for the new bicycle lanes. There are plans (or hopes!) to improve Front Street between Market and Jarvis to make it more pedestrian friendly - better paving etc) but it will certainly not be vehicle free. (The recent closure of the Front Street median at Market Street is Phase 1 of this.)
Driving in an "old town" area is almost never convenient, nor should that be some sort of planning priority in my opinion. With that said, you can have a flexible square with collapsible bollards where a roadway can exist in certain times (e.g. on weekdays or during the wintertime) and then be fully pedestrianized when warranted.