What is a good camera arrangement for city riding?
I've had good success with the Go Pro cameras for whitewater kayaking. We generally mount them on our helmets. They stand up to quite a beating and you can get more on a card than the camera you ask about above.

If you can mount it on your helmet then it will be pointing where you look and I think you'll have better success getting shots of any collision since you're often looking at it as it happens.

Here's a blog of someone doing the same thing on his daily commute. http://cranks-on-cam.com/ Looks like he's using a Drift Inovation (http://www.driftinnovation.com/x170-action-camera.php) and there is a video of his mount on the gear page.