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I always thought maxis left money on the table by not combining these two ideas. There's definitely a venn diagram of people who enjoy SimCity and The Sims, and I think it would have been an amazing blend to build a city and then try living in that city as their Sims. Or for others, to build a city made perfect for their sims.
You could do that in Sim City 4, and Sims 3 had the whole "Open World" system with the option for all the sims to live their lives in real-time without you playing with them.