Governance in support of IT or IT in support of governance?  I don't think there is a one-size-fits all model.  But there are also some great examples where an IT/governance package changes everything.  The best one is Baltimore's CitiStat; It's a performance-based management method based on software that makes detailed performance measures visible to citizens, usually geocoded, and brings city managers to public meetings to explain performance differences.  It's free and it saves truckloads of money.

For the relationship between IT and service delivery, I am not sure that "those who deliver city services" should necessarily be responsible for IT.  Everyone delivers city services.  When these services are being delivered directly to the public, I think that presenting friendly, helpful approach through existing 311 and Client Services organization is important.   That organization (I assume it's a single organization) interfaces with the public through several different levels of technology and seems to be the only one that can consistently speak both languages, besides perhaps councillors offices.  They should manage most outward-facing IT and enforce client-centred standards like language, accessibility, response time, privacy, etc.  Their information needs should also in part drive or strongly influence the inward-facing IT.  Say an internal department needs a GIS.  An internal IT manager should advocate to keep it cheap, this Client Services group should advocate to make it visible to the public, despite the cost.  The city manager can weigh these two different mandates, and with any luck will realize that openness creates savings, not just costs.