It depends also on how close you build your cities.. sometimes you want to spread the wealth around a bit so you can have two neighboring production cities. Extra population is expensive because it generally is a fairly big happiness hit.
Extra pop is the same happiness hit no matter where you have it, its all just 1 happiness per pop.
If you mean to say that too much vertical growth can inhibit horizontal growth, well that is true and that is something you have to decide in what situation it is worth to do one or the other. But, you can just build a theater in that city and for a few gold you can get many hammers if you have the tiles available.