Level of acknowledgement of strangers is a function of population density. In a big city you can't possibly acknowledge everybody you pass, so you acknowledge nobody. There's one exception: people who go for walks early in the morning are often keen to greet one another; partly because you might be the first person they've seen today, and partly because early risers are somewhat of a secret sub-society within the city.

Combine the "small town" thing with the "early morning" thing and you've got trouble, though. In a small town in Maine at six in the morning I encountered a guy who thought it was incredibly rude that I wouldn't stop and discuss (a) the weather and (b) where I was from as I walked past his house. Sorry dude, there's four million people in my home town, can't chat with all of 'em.