The City of White Nights is less of a 'city' and more a very long, multi-layered path made up of ladders and sandfalls. Some of the ladders collapse part-way up, sending Jack and party down a level or two and getting caught in a sandfall ends in much the same fate. Because the City of White Nights is a very large circle, the last sandfall in the top right will send you back to the very beginning if it catches you. There is an excellent map of the City of White Nights by Emerald0 which is hosted at GameFAQs.
Items that can be found in the City are a Tsuchinoko Dumpling, the accessory Monk Bangle and the second-best two-handed sword, Falvern. Falvern's chest is guarded by two Dark Cells and two Flash Cells, so be ready to fight when you kick it open. The sandfall just before the Monk Bangle is the one that will send you all the way back to the beginning, so watch out for it.