On the Fogdown map, I drew it out by hand in Flash CS/CS2, then imported the vectors into Photoshop CS2 at a pretty high resolution (600dpi). I would strong advise against doing it by hand, unless you have have a lot of time and lot of patience.

If you look around this forum, I've seen a few people have great success with Campaign Cartographer 3.

Another trick is, when working in high res files, cut it up, work on the PSD in pieces, then put it all together when they are lower file sized JPEGs.

Finally, try experimenting with "chunks" of city, and then cut and pasting them in different arrangements. Then go through and cut out the streets.

I'm not in front of my computer with examples, but I hope that helps.