TimThanks for your kind words... coming from a man of your experience within the industry I'll take that as quite a compliment 
A heightmap bitmap is used to generate the terrain. To edit the heightmap I started out using a freeware application called Total Terrain but in the end I ended up writing my own little app so I could have more control.
For texturing I used a freeware app called Heightland. Again though, I ended up writing my own app that allowed me to paint textures directly onto the terrain.
The buildings are all my own work (apart from the textures obviously). I found this one of the harder parts of creating the demo - I'm no 3D modeller (you can probably tell!).
As you said, that's the easy part done. Think I'll have a beer before thinking about the hard part!
