Over on the WoTC boards I used to participate in the 'Build A City' thread. The most recent version of the collective game/experience never really took off due to various reasons (one of them being that the end product of D&D 4E turned out quite differently than we had anticipated based upon the preview books.) Regardless, there are still some good ideas to be found there if you don't mind browsing through the large amount of thread pages.
http://community.wizards.com/go/thre...UILD_A_CITY_40
FYI: It may be a little strange to read. The format doesn't look right anymore because the new version of the WoTC site no longer supports the same code that the old site did.
An older version of the same idea can also be seen here:
http://community.wizards.com/go/thre..._a_City_Thread