In this vein, I don't disagree with a lot of what you say, but just to touch on a few counter arguments:
* Historic cities with good public transport systems are great, but building new public transport is not something governments (taxpayers?) seem to want to spend on in the west at present. You have to build public transport before people will stop driving cars.
* I question your point on high-rise living. Why is this bad? What makes you feel bad in New York? New York is not the only possibility of high-rise living.
* The cost argument is definitely there. See my response to another comment.
Having lived in three apartments in the densest city in America, this is patently false. I can hear my neighbors eat dinner, fart, kick their son out at 2am, etc. You can do sound insulation, but that doesn't mean cheapo developers do!
I have previously lived in some hilariously thin walled places before. I actually think the 2-3 story apartment rows in suburbia are the worst offenders. If you are building a 20+ story building, you have to make it a bit thicker and use steel or concrete.
In fact, in my current apartment I have not once heard my roommate when my door was closed despite the bedrooms sharing a wall.
Perhaps this building might be unusually well built. All the windows are double-glazed for example, which is definitely not needed for climate reasons around here (Berkeley has to be one of the mildest climates on Earth).
Having said that, this building is mostly populated with moneyed students (the garage looks like a BMW/Merc/Audi/Porsche showroom - factory stickers are common). I imagine they're not the noisy type. We're a family of 5 where the kids have done things like use skateboards indoors, so perhaps our neighbours are cursing us for the noise :).
* Just because apartments are small doesn't mean you hear your neighbors, or live uncomfortably. I've lived in three different apartments the past decade and the only time i had noise issues was with a neighbor who played techno at full volume at 3 am, which would be an issue in any city design, dense or sparse. The notion that hearing three crying babies every night is just how it works is only true in hollywood movies which fictionalize poverty in the inner city. In real world apartment life you have a mixed habitation pattern, and soundproofing.
* suburbia is even less dense than any sort of city. It's not the density that's the issue, it's the ability to commute. In a city where commuting can be done on foot or through public transit, like many european cities, it's simply not an issue. I walk 5 minutes and then take the tram to work, reading HN while commuting.
* There's no such thing as a traditional city, yet you're arguing against it. The article was quite clear on what is meant by the traditional city.
* Having low density at the edges is a feature, not a downside, because some people prefer the isolation. Anyway, if we built all cities in this pattern, there would be a better density distribution. City edges would blend. In high density urban construction everybody struggles to reach the center and get back out again, every day during rush hour. Having ten smaller less dense cities without suburbs instead of one big dense one with a lot of suburbs seems like it would have fewer traffic problems and a better quality of life. Maybe it's just my personal preferences talking though.
* I've been to NY, as a tower city with low car ownership it is impressive, and i was glad to visit, but also glad to leave. The best living in NY is in traditional city areas like greenwich village. High rise is not the answer to quality of life in urban planning.
* The cost argument is a red herring. We don't know how to build traditional cities cheaply because we haven't done it enough recently. It would solve itself. Business finds a way when forced to.
Anyway, whatever design is used, there is a sort of universal understanding what a city that is nice to live in is like, and it's one without cars. Cars simply don't belong inside a city where people actually live. I hope urban planners everywhere eventually realize this and force cars to remain at the edge, where they belong. Usually the people who want to drive their car inside the city don't even live there.