Such a system has been proposed for Bristol. I'm not sure how they're going to deal with the hills though.
The bike schemes are usually funded by advertising, JCDecaux got an absolute bargain with the Velib scheme - access to a huge number of on-street advert spaces for a fraction of the normal cost. I have read a suggestion somewhere that the energy consumed by their illuminated adverts renders the environmental benefits of the scheme null and void, but I'd check that out before quoting it as fact...
"Rockets are just another name for trouble. Either you just had trouble, you are having trouble, or you are going to have trouble." - Milt Rosen, Viking Program Director, White Sands Missile Test Range