Loving the beta so far.
One thing I have been struggling with is city development. It seems... bland. The part I love most about them is when they raise a level but that is few and far between.
My suggestion is to get rid of manually building buildings. A city would have 2 modes. Training and Growth. When a city is training a unit, it does not grow - this is the tradeoff between development and expansion/protection. Sort of like civ 4 when you build a settler. Now take the city leveling system and make it happen a lot faster - you might build 25 buildings in your capital over the course of the game so instead you would have 25 levels, each level basically giving you a 'building'. You could even have levels 5,10,15,20, etc be your 'wonder' levels where your population makes something truely amazing.
Say in a normal game you build a lumber yard and an inn followed by a settler (around 20 turns). The new system would have you grow for 5 turns - level up! Now you can pick a building to build. Maybe you will pick that lumber yard which gives a bonus to growth rate - wood for new houses and all. Maybe you get a rare option that you don't really need right now but youll take it because its rare... maybe you don't get a building option that you wanted and this sets you back a bit or forces you to alter your strategy. Then you grow for another 5 turns - level up! Now you can pick your inn which increases growth AND training times. Now time to build the settler for 10 turns which means you sacrifice any growth for that time.
I think a system like this would both simplify the current system (and reduces micromanagement! - I don't know about you guys but once I have 5 cities it starts to become a chore, and I LIKE micromanagement!). More importantly I think it would be fun - it mimicks the hero leveling system more which is I think one of the brightest parts of FE.