Have watched City on TV (not derbies) in town itself on a few occasions, and have either found the atmosphere dead or overly raggish, depending on how important the game is to the league. Tend to find a lot of rags travel up to Piccadilly and then hang around in town, presumably they can't get a ticket so just go for a day out. Would certainly advise caution of you do choose to watch in town, you may find a lot of their fans are day trippers and won't give two thoughts to starting something then running for the train. Last place I watched a game was at the Town Hall Tavern, West Brom, my wife was expecting any day with me on standby, she was meeting friends for a hen do/afternoon tea round the corner. Anyway, were more rags in there cheering on our opponents than anything, they all disappeared after 70 minutes when we scored the winner.
Have you thought about watching just outside of town, at one of the pubs the supporters clubs gather at? Usually a good choice in my experience. Used to watch at the Nelson in Didsbury on away derby days, but think they lost their telly 'license' last year?
Was great in there on derby day - all blues except the one old boy red who is one of the only rags I have ever been able to stomach and could take a defeat as well as a win (he actually said well done boys, great to watch, after the 6-1), and if we won you could see the red pub opposite emptying as full time approached as the rags all did one to get home early - thta always spoke to me of their base need to win, win, win, rather than just enjoy the ride. Not us lot though, win or lose on the booze, and Nelly karaoke to top it off. Remember traffic being stopped by celebrating blues and the police having to have a word on more than one occasion.
Actually watched last years or the one before at the pub round the corner, The Fletcher Moss, but that was around 50/50 thanks to a heavy didsbury student contingent shouting on Rooney & Co in very non-manc accents.