I would stick to one domain, personal choice though. The reason I'd prefer one domain is that it allows you better "Branding" opportunities and more control over having common content in different areas of the site.

I would prefer to go that way. It would be cheaper, and probably easier to maintain. On the other hand, with one domain per city, I could include the city name in the domain, which I'd imagine would be a big help for search rankings. If I go for a country name, I'll also have the problem of much of the site being empty while I'm developing content.

Single domain makes more sense, especially if the "city".com is already in use! One site, you control it...

The city name would be a part of the URL if you create one directory for each city depending on the amount of information and images you have for each city. If each city won't have more than one or two pages, the city name is the page name. In that case I might think about regional directories instead to keep navigation simple.

There are pros and cons for having both Subdirectories and Domains. Subdirectories require one monthly hosting fee and one CMS for each category, in your case each City but limited customization (in case you want to have a unique style each SubDirectory). In having various domains, you can have Multiple separate Websites which is good if you want to evaluate each website. They have different CMS, Google PageRank and stats so there really is freedom and control per site. It is also easier for a each domain to do their own Local Optimization. The downfall for having a lot of domains is Additional Hosting Fees and content moderation.