I always felt this movie was a near miss. The ideas behind it are really interesting and thought-provoking (keep in mind it was made before THE MATRIX). Unfortunately, they didn't quite deliver when it came to execution. So what we're left with is a visually dazzling and thematically poignant film that could have been a classic but instead makes you wish they had pulled it off a bit better.
Regarding your Kafka comment, it's worthy of mention that the guy who wrote DARK CITY (Lem Dobbs -- perhaps my favorite screenwriter in Hollywood history) wrote a movie called KAFKA a few years earlier that Steven Soderbergh directed.