If I understand you correctly, you're having trouble opening the file because you simply don't know how to as oppose to Photoshop erroring while trying to open it.

If that's the case, here's the lowdown...

There are many different ways to open any image file into Photoshop (as there's many different ways to open any file into any application).

1. From within Photoshop, choose File > Open and locate your PHG from your hard disc or
2. From the file itself, you could right click it and select the Open With > Photoshop or
3. If you use a Mac, you can drag the PNG file and drop it on the Photoshop application icon (I'm not sure whether PCs can do this too).

Now that you have the file open, make sure the file you want to ADD the PNG image is also open (through one of the steps above) and visible next to it (So your PNG image window is open next to the image window of your city).

Select the top most icon in the tool box which is called the MOVE TOOL (the tool box is the vertical strip on the left of the screen by default) and hold down on the PNG image and start dragging to the other image window and let go.

That would make a new layer on your City image (which you can see in the layer's panel - if it's not open, choose Window > Layers) and you can now drag it all over your city to your heart's content using the MOVE TOOL.

If it's your intention to make a city image from scratch by adding all these PNGs to it, you're going to have to create a new Photoshop document first. Decide the dimensions you want the city to be and go to the File > New menu and enter the particulars. If you intend to use this on your screen only, then you need to use a resolution or 72dpi. If you're intending to print this out on your inkjet printer, use a resolution of 200dpi. Professional images for print (in magazines for instance) only need a resolution of 300dpi. All those resolutions are reliant on you entering the actual intended cmm or inch dimensions in the New Document dialogue box. Your colour space should be RGB. (Professional print uses the CMYK colour space but you if that's your intended output, you can convert it at the end).

If that wasn't the problem you were having, I'm sorry for rambling on the basics.

If that was your problem, I think you're going to have to have a sit down with the manual because it only gets more complicated from here on out I'm afraid.