Look at what Equadorian did rather quickly along these lines using some free scripts available here on the forum.
http://www.sketchucation.com/forums/scf/viewtopic.php?f=180&t=16484
Its half way down that page. The general idea is he made a grid, then randomly subdivided some of it using Jim protrude script. Then randomly applied colors to it, replaced the colors with images. THen ran greeble on it. and voi-la! his city. Its pretty impressive, especially for free scripts. And yes, making a more in depth city generator is a dream of mine that I'm slowly working on.
Chris