Is the current city building model a place holder? It feels rather cumbersome, and a bit uninspired as it is. I found myself just tossing down buildings without much thought other then, I want a bigger city, spam houses/estates! So I sat and pondered it for a bit and these are the thoughts my brain produced on the matter!
POPULATION
Food = optimal population
Food production is based off how much agriculture you dedicate in your town as well as how much it recieves from other towns. A town will only trade food if it has more then its population needs, and is traded to towns based on need. If a town has a population lower then its optimal, there is a food surplus. If a town has a population higher then the optimal, there is a food shortage and starvation becomes a concern.
Prestige = population growth
Prestige increases based on what you have built in your city, what resources it has direct access to, and the overall statistics of your empire. The more prestige you have, the more people want to live in your city.
Tiles = population capacity
The number of tiles increases based off your prestige, the number of tiles will determine the level of the town. Each tile that becomes available increases the pop cap of your city and you designate which tiles get cleared and what their purpose will be. The tiles purpose determines what improvements can be placed within, each tile can only have 1 improvement.
Civility = population happiness
Civility represents how happy your population and is determined by a combination of what improvements you place in your city, your pretige, population issues and events in the world. If a cities civility becomes unstable from lack of food, or other circumstances, it will impact the towns research, prestige, and economy negatively. If a city has an abundance of food, the right improvements and other factors, civility will increase, impacting income, prestige, and research positively. Extremely low civility would represent rioting and rampant crime, and extremely high civility would represent an utopian city, where no citizen is left wanting and all are content.
TILES
As a town grows, the number of tiles available increases, a a player you can clear out the tiles you want to shape the city to your liking. When you do this you also choose the type of tile it will be, which in turn determines how that tile affects your city. You can redesignate a tiles purpose at anytime, but any improvements built on that tile will be lost when its changed unless its a universal improvement. Each type of tile provides some sort of bonus to the town and does so with very little to no upkeep on its own.
Agriculture:
Agricultural tiles represent the amount space set aside to be farmed for food. As cities grow larger, they can replaces agriculture tiles with other uses as long as they can bring in enough food to feed the current population from surrounding settlements. If agricultural tiles are placed on fertile land and other related resources, the food produced is increased.
Community:
Community tiles are where the people live, representing parks, town squares as well as homes. These tiles affect civility and house improvements that often deal with increasing and maintaining civility.
Economic:
Economic tiles are where the merchants, craftsmen, and artisans setup shop. These tiles affect income and can house improvements such as smiths, merchant guilds, and inns.
Research:
Research tiles are where universities, alchemists and mage towers are located. These tiles affect the amount of research your citizens do, and can house specific improvements related to research and magic.
Resource:
Resource tiles are built on a specific resource, including mines, lumbermills, and quarries. The tiles provide the resource to the town that owns it and can house improvements that affect resource gathering.
Military:
Military tiles are where training grounds, barracks and workshops are built. These tiles relate to how quickly a town can develop citizens into military units and house improvements that affect the strengths/weaknesses of the units produced.
IMPROVEMENTS
Every tile can hold a single specialized improvement. These improvements have specific advantages, bonuses and even penalties they apply to the town they are in. Each improvement can only be built in a tile with the same type as the improvement. Universal improvements can be built on any tile. Some can only be built once per city, once within your empire, or even once within the entire world. Others can be built as much as desired, limited only by the number of available corresponding tiles. Almost all improvements require some sort of upkeep to maintain and most improvements will affect prestige in some way.
EX:
Dense Housing, inscreases population cap significantly, decreases civility marginally, low upkeep. Unlimited. These homes fit alot of people into limited space, which causes some unrest as neighbors step on each others toes.
Merchant Guild, increases income, prestige and caravan speeds significantly, high upkeep and consumes extra food. Limit 1 per city. The merchant guild will bring you wealth and attract people with the jobs it represents. But the guild masters have rather expensive tastes and are gluttonous pigs!
FINAL THOUGHTS
Prestige determines population growth and capacity, the population determines how civil it is, and civility in turn affects prestige. Untouched by the player, each city would naturally balance itself based on what it has within its boundries. A smart player can manage his town to push it outside of that state of equalibrium, but will need to maintain the town with improvements and and a watchful eye, or else it will fall back to its natural balance point. This makes not placing improvements as important a move as building them.
Not all the ideas represented here are very far from what is currently present in the mechanics, I essentially left food and prestige for instance with basicly the same purpose. But the overall mechanics are a bit different in their relation to each other. I'm looking at more of an abstract city layout system with improvements being just that.
Mind you I've written this at 2am, so it might not be as fleshed out as it could be. So if something doesn't make sense, there is a hole in the idea I didn't see, or you have something to add, please do. If it makes sense and you like it, please sing your praise. 
edit: maybe this should go in the ideas forum? though it did spring from my time spent fiddling in game trying to break it...I guess its up to the SD guys.