Your city MPG improves with more gear to a point. I get 2 mpg better in the city (16 mpg vs 12-14) with 3.23's as compared to 2.41's. It requires MUCH less throttle to get it off the line, and that is what is important in a car that sees constant stop and go driving. Now, 3.73's would be a bit much, and counter productive. I probably sacrificed some highway mileage with that gear, but highway mileage is pretty worthless if you live in an urban or suburban area like I do. I rarely ever even see 65mph, maybe once a week. For me, a 3.23 with a TH 200 4R is the best setup as it gives you 33% overdrive, knocking the gears back to a 2.16 in high gear. I ran it with the TH200 4R and 2.41 and got 12-14 mpg city. It was too much of a good thing. The compound ratio for that setup is a 1.61:1 !!! WAY too low to pull with my engine. Heck, the 231 V6 got 14 city and 29 highway with the 2.41 axle. That is because a 2.41 is great for highway cruising, but useless around town. I had to bury my foot in it to get it out of it's own way. You gotta remember that back when GM built these cars, they were using highway MPG for bragging rights, and so they tuned their cars to be optimized at the double nickel.
I can remember 12 years ago taking the car up the Sunshine Skyway bridge with the V6 and 2.41's. I had a technique: Top it out at it's max speed of 79 mph, and hold it to the floor the whole way to the top. By the time you crested the bridge, it was going 40-45mph! This is why high altitude G bodies with the 231 V6 came with the optional 3.23 gears. It was useless with the 2.41. I may, one day upgrade to the 3.42 gears for better performance (were I to find them cheap enough), but I am really happy with the 3.23's. I only need to add a posi diff to the rear end to make it perfect. It must also be added that my engine makes 380 ft lbs of torque at 1800 rpm, and 400+ from 2200-4500 RPM. It does not need much gearing to get it going, but it does need some.