The city's improved levee system helped spare the city from being inundated by flood waters, as was the case following Hurricane Katrina in 2005.
A weakened Gustav washed ashore about 70 miles southwest of New Orleans. Eight U.S. deaths were attributed to the storm, following at least 94 deaths in the Caribbean.
About 80,000 homes in New Orleans lacked power after the storm snapped transmission lines and knocked out 35 substations, the Associated Press reported. The city's sewer system was damaged, but drinking water continued to flow -- an improvement from Katrina's aftermath.
Crews are inspecting New Orleans Tuesday to review the damage, and residents could expect to return from hotels and shelters beginning late Wednesday or Thursday, Nagin said.
Gustav was downgraded to a tropical depression early Tuesday and evacuation orders were lifted for three southeast Texas counties.
However, more tropical storms are on the horizon, including Hanna, which was dumping torrential rains on the Bahamas and the Turks and Caicos Islands on Tuesday. Hanna has winds of 70 mph, just short of a Category 1 hurricane.
Tropical Storm Ike, meanwhile, moved westward after forming Monday between Africa and the Caribbean. It was expected to reach hurricane strength of 74 mph within 36 hours.
The flurry of Atlantic storms confirmed predictions of a busier-than-average year. The U.S. government has forecast that 14 to 18 tropical storms will form during this year's hurricane season, compared to an average of 10, according to Reuters.
Oil companies with offshore rigs were watching the storms' paths closely. Gustav appeared to cause less damage than expected to onshore and offshore facilities, helping oil prices fall more than $8 a barrel to $107 in electronic trading on the New York Mercantile Exchange, the AP reported.
Damage assessments of the facilities were continuing.