Arshavin is probably just getting worried that Arsenal won't match the 18M that Zenit want and that he will be stuck there until the summer. Therefore he is opening the door to City as he knows we can meet the asking price and would pay higher wages than Arsenal.
Although he can play in a few different positions I can't see us moving for him unless we fail to land Kaka. Might be worth hinting that we are interested just to stop him closing a deal with Arsenal until we know where we stand with Kaka.
That said I would prefer us to go for Diego over Arshavin.