With Google Earth V4, you can now add textures to 3D models. The guys at the Digitally Distributed Environments blog have written about many ways to show and generate 3D buildings - including a stereoscopic 3D rendering, and using LIDAR side-looking-radar-like technology. Recently, they posted a city block in 3D with quality textures applied for viewing with the new Google Earth V4 (beta). Check out the city block here (only GE V4 - 4 MBytes). Here's what they say about the technology used to make it:

We have placed online a first draft output using our in-house software to obtain accurate height/facade data from photographic modelling. Using a camera calibrated algorithm we can ensure accurate placing of windows/doors etc to rapidly create city models.

Here are some other examples of buildings for viewing with Google Earth V4 with textures (you should delete each previously loaded set of models out of your Places before loading the next one to conserve memory - or just shut down GE V4 and restart it for the next one):

• Portion of Golden Colorado with textures (10 Mbytes) - by Chris Haller - see his blog entry. He concentrated on the front facing street-level views of these models with the textures.
• Twelve Blocks of Berkeley, California - This is part of a project to auto-generate 3D buildings from pictures, and they have now released this Google Earth demonstration. It looks excellent from helicopter distances, but the models look a little crude when viewed close-up. Very interesting stuff!