About James' The Bostonians, yeah--it should definitely be on there. The book makes fun of Harvard students, and gives us proof positive that the red line has not improved in the slightest (and has perhaps gotten worse) over the past 80 years...in any case, people didn't offer their seats up to those in need of them back in the genteel era, either!
There's also a novel (which I haven't read yet) called It Happened in Boston, which looks fairly good in a Will Self meets Master & Margarita meets a pretentious Brooklyn literati (Safron Foer, Chabon, Letham, et alia) sort of way.
Oh! And Margaret Atwood's dystopian A Handmaid's Tale (which is even scarier now in the Bush era!) is set in Harvard Square...it's about a future where a Christian Coalition-type regime has taken over the US, and so "gender criminals" are strung up over the wall of Harvard Yard, and the Brattle Theatre is a reeducation/indoctrination center. Every location in the book corresponds to a real place in Cambridge, and it's fun to pick them out. But not technically Boston.