What to create for an RPG city - I generally find it works best for me to have an idea of the flavour of the city, and create a small number of interesting NPCs and locations. I don't try to map it like a dungeon; and generally it's the NPCs that are by far the most important element. I don't generally sandbox it, but an incredibly dangerous city like Khare, Port Blacksand, and maybe the City State of the Invincible Overlord could be sandboxed.
Something I've not done but would like to try would be to have a neighbourhood, small-scale sandbox - again the NPCs would be most important, but geography would become more significant. I think combat would need to be fairly rare even in a really violent city, though, outside of some kind of ruined/combat zone like The Big Rubble for Pavis. I was very disappointed that the 4e Neverwinter Campaign Setting made no effort at sandbox-type keying, but it might be a good place to set my own sandbox. A subsection of the CSIO would also have potential.