I support the traditional Christian doctrine of subsidiarity: a matter should be handled on the most local level possible. Where it is impossible to handle a matter locally, it should be referred to a higher level, all the way up to a national level, which seems to be the optimal place to have the highest level of government.
So to answer your question, there should be a federal government for the nation, in the traditional sense of the word, but the role of this government should be minimal. Then there should governments at the provincial, county, municipal, and neighborhood levels, each with increasingly more involvment in the citizen's daily life.