Blender to create an Environment


I want to create a large environment, based on a small part of a large city. I have to model several quite detailed buildings, and put them all together on a terrain.

I am experienced with Blender and could create models of buildings easily with it, but I was wondering - would it be best to create the terrain with blender also?

Would it be best for me to individually model each part of the city and then import the buildings into jME, or should I create the entire environment as a single mesh and import it? I will be needing to import textures with the buildings and the ground too.

When I say best, I mean performance wise, but I also need it to look fairly realistic.

Thanks for your help in advance,