You still have to physically remove the composted feces which is a logistical nightmare in an urban area, there are reliability problems with maintaining the proper environment for proper decomposition (temperature & moisture) and compared to pit toilets are bigger and more expensive (though in an urban area, you don't have the land for pit toilets).
Really, a wet sewage system is superior for densely packed areas.
Wet doesn't mean pipes to a processing plant necessarily though. Ive seen an amazing system that used a moderate sized pond, masses of reeds and somehow this processed the water and filtered it. There were fish and ducks swimming in it. That said, if dealt with waste from one house. I'm not sure this would scale very well.
Really, a wet sewage system is superior for densely packed areas.