A good article in InfoWorld about a non-profit organization Code for America focused on helping city governments in using and taking advantage of Web 2.0.
The Mission of Code for America is:
Code for America enlists the brightest minds of the web industry into public service to use their skills to solve core problems facing our communities. We help talented technologists leverage the power of the internet to make governments more open and efficient, and become civic leaders able to realize transformational change with technology.
For 2011 they selected four cities:
