"...Treating the residents as a problem to be solved rather than as part of the solution..." Yes. Will Doig nails the problem with "top-down urbanism" in his Salon/Alternet feature on sensor-studded, mechanically micromanaged "Sentient Cities."
What's missing, as he notes, is the difference between a city as a workplace -- as a rationalized system -- and a city as a place where whole and sometimes less than apparently rational people live whole and sometimes less than apparently rational lives. (People always do stuff for reasons. Sometimes their reasons are unacknowledged.) It's what worries me also about the possible campus-like future we may have ahead of us South of Market in San Francisco.
Not that it's wrong to use sensors for a narrow practical purpose, such as locating potholes in roads -- but that it's worrying if people in city govt ever presume that people's lives consist entirely of what appears in the data about them.