NYC uses both FAR and setbacks. The result is wacky. It seems to me, that if you're going to have a height limit, then you should zone with setbacks, whereas, if you're expecting people to build towers, then you should use FAR.
For 1 and 2 family homes, in NYC, the setbacks create an envelope to build in, but the FAR allowed is typically less than what you can "fit" in that envelope. This really frustrates people because they want to build as large a house as possible. A typical R2 single family lot is 40' x 100', which is allowed 2,000 SF from the FAR. But the typical owner wants 3,000 SF.
In the R8, R9, and R10 zones, where people want to build towers, the FAR works fairly well (and there is not setbacks nor height requirements).
I think that the zoning should use setbacks (front yard, side yard(s), rear yard, and height) OR use FAR (with lot coverage and open space percentages).