Err... You gain territory offensive bonuses. You also can gain additional defensive/offensive bonuses from forts and a specific faction trait (turtling or some such thing). You probably just didn't notice because your stack o doom runs over dragons >.>
I really like the idea of actual walls being present in cities as it provides an interesting new element to tactical combats, but I don't think that the defenders should be provided with both. I propose the following changes:
1. Territory bonus gets reduced to 10%
2. Level 1 Forts give a 3 hit point barrier
3. Level 2 Forts give a 7 hit point barrier
4. Level 3 walls give a 15 hit point barrier
5. Catapults inflict 4 damage to one section of wall, and 2 to surrounding walls. All other units (without traits) inflict 1
6. Forts lose their defensive/offensive bonuses and the initiative bonus is applied to the -first round-
7. Ranged attacks passing through walls grant the defender +8 dodge
However all of this is additional busy work, and the way it operates now is 'okay'.. just not 'fun'.