Personally I think you way over thinking this.
By splitting it into 3 domains you are diluting your content and making your SEO work 3 times as much work.
There is a danger of it being seen as a link exchange as well although across 3 sites I doubt it but even so I would be careful.
As for cities Doodled is correct, use the directory approach if your targeting different areas don't go buying even more domains as each one then will require even more SEO work.
Its hard enough to get 1 site to the top of page 1 let alone 3 or more, unless you have a army of SEO experts and content writers, backlinkers hidden in the background.
Good SERPS is great, Traffic however is even better