I'm going to go with the people don't play RPG's to relive their current boring lives, they play them to go explore some other world. The people who want to play RPG's tend to be nerds who are much more interested in LotR or Star Wars than an RPG about hanging out in the hood. Gamers who prefer, ahem, Escort Services and Becoming a Pimp in their games will tend to recoil at any requirement to use their brain while playing a game.

Although not a traditional RPG, Shenmue 1 & 2 both took place in downtown, surburban Japaneese/Chineese cities during the mid - late 1980's.

No beating up taxi cabs, the closest thing would be beating up two guys on motorcycles.

Earthbound was indeed an awsome game. Beating up old ladies and hippies never got old.

It's a Wonderful Word is an RPG for the DS that takes place in an Urban setting.

RPGs are like first person shooters and have cliche settings that become an industry wide practice/standard. For example, First person shooters are based around War, Examples are World War I or II; Waring Civilizations, like an Alien Invasion, or a job where using a gun as a primary weapon, jobs like Swat, Police Officer, Spy.

This may be way RPGs use a fantasy setting. Swords, Bows, and Magic tend to bring a fantasy setting to mind not an Urban one. It still does not mean that an Urban RPG genre can not be developed. May be RPG developers will move in that direction eventually.

Great Question, by the way.

Thats my point: Some of the best FPS, RPGs, and such are usually based around the antithesis of their own genre cliches.

Best JRPG? Chrono Trigger (atleast imo), becuase it does away with a set world, and opens up multiple worlds and paths to victory and such.

IMO, I agree with the Saints Row comparison...Kind of. I would love to see a Saints Row-esque game (atleast in the driving, shops, and town layout), but make it like a KOTOR-esque ARPG, in the fact that it's strongly party based, laden with stats, and tactics. Operation: Darkness might wind up being kind of like that, but in a very strict linear-level sort of way.

And I also agree with the Shemmue comparisons as well - which was a good example of how a strong RPG story can be told in an urban setting (as well as the entire Midgard portion of FFVII).

But again, I just haven't seen anything that could a great seller: a GTA Sandbox game, but relying on strong RPG traits (like an Oblivion/GTA Third Person hybrid).

Shenmue was the first thing that came to mind.

Also don't forget the ground breaking ARPG styling of River City Ransom.

I would love to see more real world based RPGs. I like Final Fatasy and all but I feel kind of been there done that with that type of setting.

There is no reason why a modern/urban RPG couldn't contain fantasy elements. Use the rela world as a backdrop, add plagues/aliens/mutants etc. One of my favorite movies is Reign of Fire. It was so much more captivating bringing dragons inot modern day earth than to some fantasy realm or radom pseudo medievel time period. All it would take is a little global crisis and people would be hitting each other with clubs for gold in no time.

Also I may be crazy but this Modern/Urban RPG combined with the point and click puzzling of Zack & Wiki makes me think it is time for a game in the mold of Oregon Trail.

Shadowrun and Persona come to mind.

And Terranigma > Soul Blazer > Granstream Saga > Illusion of Gaia/Time 

I would definitely want an RPG like this.

I've been "escaping the real world" to fantasy and sci-fi games for years...when games are based in the "boring" normal life...it makes it instantly relatable. I'd probably be even more interested in a game set in modern times, but with a fantasy/sci-fi twist...monsters/aliens attacking modern cities and such...it's been done in games, not as much with RPGs though...

Fallout Games are urban...

Fallout 3 takes place entirely within Washington, D.C.. However, it's a Washington, D.C. after a nuclear holocaust, so I'm not sure if that fits your description.

I think ArtOfAngels hit on the reason behind the dearth: people typically look to RPGs for escapism and want to experience things that they cannot enjoy in their own lives. Even The Sims seems to cater to that -- with people able to purchase and create huge mansions and landing insane jobs that they could never hope to have in reality.

Earthbound

Terranigma again, BINGO!