But the cities played a major role, something they had not durimng the early medieval and just regained in the high medieval.
Cities played a major role, as i said : regulation, trade, power, centralisation.
But when it comes to the production, to the higher incomes, you have to see about the countryside and particularly the villae in the western side of the Empire.
Regarding the population, if you look closely, you can see that if their population lowered, the approximative proportion of urban population in comparison of rural one didn't changed too much : in italy you have still around 20% of urban population, in Spain maybe the same (cities like Saragossa have still 10 000 inhabitants before the Islamic conquest) and less in Gaul, but it was always the case.
So, you don't have really a specifically urban crisis, but a global demographic decline (decline of the mediterranean culture for climatic reasons, plague and other epidemies, etc.)
You have to ask, why did that happen? The structures of the Roman Empire were gone. Most cities have turned into large villages.
You're wrong. The structures of Roman Empire didn't disapperead. In face, the biggest problem of romano-germanic kingdoms are that the new masters used the roman structures without adapting them.
Incomes calculation, institutions, economy, the different dynasties tought that is was better to preserve it as it was because they were so living in the shadow of Rome they couldn't really think of another organisation.
In Spain, by exemple, roman features were maintened until the late period, or think about Theodoric's Italy. No, except in the less romanized parts where a "roman city" was mainly a joke even during the apogee of Rome, the roman civilisation perdured, admitedly in parallel of a germanic culture.
And the Franks were not Romans. they had their own culture and political structures.
In that you choose the worse exemple for your point : the Franks were the germanic people that was the more romanized after the conquest. While the Ostrogoths, the Visigoths or the Lombards, by exemple, created laws to forbid inter-ethnic marriages, alliances etc, Franks did not.
In fact, they didn't seems to have really searched to make a separation between them and the gallo-roman population (hence the varied origin of many frankish, aquitain or even provencal leaders). Soon, they abandoned their original religion to choose the roman one, they passed alliances with gallo-roman (something the visigoths didn't made and that caused their loss of the Gaul) and adopted many roman uses.
The reading of Gregory of Tours is really helping on that, i highly council you to read it if you're interested.
Feudalism was developed out of the old Germanic tribal structure.
Simple answer : no.
Long answer : Feudalism is what the traditional gallo-roman clientelism gave, influenced by celts and german uses and most of all, directed by circumstance.
What you said is a common mistake, as it was the official historiography until the early XX century.
Even half a millenium after the migration era the Germanic tribes still existed.
I think no one would say that the Franks of 1000 are the same than Clovis one's.
Their language, their customs, their laws, their institutions were totally different. Oh sure, there is a real frankish influence (especially in warfare and some parallel organisations), but the background is mainly gallo-roman especially regarding the base of the nobility : land-owning.