How can I import GEOTIFF raster data? I have a terrain model in the form of a GEOTIFF raster which is from the SRTM (Shuttle Radar Technology Mission) data. 

Can this raster data be converted / imported into blender into a triangular mesh? 

Can 3D city modelling be done, over this mesh?
Blender can use tiff images, not sure if geotiff works to but it should work too. Otherwise you had to convert the geotiff to a png or jpg first.

Add a plane (same aspect ratio like your image). Go to the modifier tab and add a Subdivision Surface modifier. Set it to Simple. Add 3 or 4 subdivisions and apply the modifier. Add again a Subdivision Surface modifier to control the resolution of your mesh later.

Next add a Displace modifier and add a new Image or Movie texture there. With the rightmost icon you can switch over to the texture tab, load your image and give your texture a name etc.

Back in the modifier tab you can play with the values a bit (Strenght 0.2 for example).

You could add the Decimate modifier to simplify your geometry - just play with the values, Collapse mode should give good results for terrain models.

Here I found a tutorial wich covers also the geotiff conversion (under "Create Heightmap") http://www.navimationresearch.net/2013/norway-in-3d-part-1/ sorry link is dead now.