I had a game where i completed it, and it seems the road to money = population maxxed.  I had the best armor, weapons, and shields I could afford, and the upkeep was still only 10 gold.  The up front investment was more time (possibly more gold couldn't tell), but I had like 4k and 10-12 cities as well.  I was producing these super guards 1 per but only had 6 at the end of the game (since I could find no way to disband or upgrade existing units).

Yes, as much as I liked Alpha Centauri, that was a problem there.  Once you had researched everything upgrades became obvious and there was no real trade-off.

Heavier weapons and armors should reduce speed and agility of the unit.  You'd hope that you could reach the point that your nimble warriors could avoid many attacks and move across the map quickly while still having the danger that a heavily-armed fighter if he did hit you would maim or kill.

Cost should also be a factor, but not just in that heavy iron armor costs more than leathers.  Ideally, I'd like to see light armors that are either magical or just really well-produced and out of fine materials that could also cost an extreme amount to make.