I'd say they'd be rather good for RPG's.
Right off the bat, you end up with a pretty 3D environment to build on and around - buildings are going to be multiple levels, you'll have the canals instead of streets between, then likely bridges of all sorts across the canals, and the buildings as dungeons could go up (as suggested by
@MGibster or have them go down into water filled basements, or buildings that have sunk and been built on top of.
Or, have there be access via canal into subbasements or dry areas beneath the city (from before a flood? how are they dry? magic? natural forces?). So many options, and they don't have to necessarily make logical sense.
I also think I'd lean, as a player, into quicker, thief/rogue like characters, or swashbuckling types, just given there would likely be a need to sneak around a lot, hide, not fall into canals, jump from boat to boat, etc. Though this wouldn't be necessary, it would just feel very cloak and dagger.
It also opens up some interesting worldbuilding possibilities, some as mentioned above.