City of God is indeed a fine, thought provoking film. I was so intrigued by the favela (slum) gangster culture of Rio that I wrote one of my feature writing articles for class on it. It was top stuff. If you have time, make sure you check out some of the Brazilian gangster-techno-hip hop that's starting to make its way out on to American shores. Very cool stuff.
On the acting- it was convincing, but I don't know if it's necessarily all that praiseworthy. Most, if not all of the actors were themselves Brazilian mafiosos that director Fernando Meirelles picked up off the streets of Rio (or was it Sao Paulo?), so they weren't exactly playing roles that were foreign to them.
