Kei-cars are good for city living, yet they are all over Japan, even in the rural areas. It's not only about city density, but factors like vehicle-specific taxes, high fuel prices, and narrow roads that contribute to the popularity of kei-cars all over Japan.
In fact, in a big American city, Kei's would make a lot of sense too. The fact that the Smart car and Scion iQ are in the US is a sign that maybe Americans could also get used to a kei car. They are everything a city dweller would need without the excessive weight, speed, or size one does not need.
These kei's are much better than the Smart car in my opinion. The only advantage of the Smart I can think of is that it meets US crash test specs (although the car's crash test results are quite questionable when hit by a larger vehicle instead of a wall).
The new Suzuki Wagon R is rated at 28.8 km/l. That's a hybrid-busting 67.7 mpg.
Here's Suzuki's full line up in Japan. Japanese automakers have much bigger line-ups in Japan than they do in the US, creating for far more variation.
http://www.suzuki.co.jp/car/lineup/index.html