You need to set a listener for the mouseover event. The [markers][1]markers page lists a "mouseover" event, and the [events][2]events page shows how to configure a listener. So the code will be something like:
city1.on('mouseover', function(e) {
//open popup;
var popup = L.popup()
.setLatLng(e.latlng) //(assuming e.latlng returns the coordinates of the event)
.setContent('<p>Hello world!<br />This is a nice popup.</p>')
.openOn(map);
});
(Note that I haven't actually tested that, so view it as pseudo-code)
Steve [1]: http://leaflet.cloudmade.com/reference.html#marker [2]: http://leaflet.cloudmade.com/reference.html#events