5+5+5+5... > (new culturecostbase) *(.3)(num cities) I'm not sure that's always true or even mostly.
n = number of cities
c = cost for the next policy.
(5 * n) versus (c + 0.3 * c * (n - 1))
that is the same as:
(50) versus (c * (7/n + 3) )
The key factor is (7/n + 3). This starts at 10 and drops quickly to a value between 3 and 4. This means that as long as your cities are producing the same culture, more cities will give you policies faster. However, the first few cities provide the biggest improvement to getting policies more quickly. Your second city boosts your policy generation speed by 54%. Your 7th city boosts it by 4%.
However, your cities don't all produce the same culture. To simplify things, let's assume the capital produces some static amount of extra culture. This is palace + wonders + CS allies, etc.
b = capital bonus
b + (5 * n) versus (c + 0.3 * c * (n - 1))
or
(10 * b/n + 50) versus (c * (7/n + 3) )
Now you also need to take into account the (10 * b/n) factor. This also drops with every city you add, but unfortunately, it does not bottom out like the (7/n + 3) factor. Every city you add is cutting this bonus down. The effect this has on your policy generation speed depends on how big the static bonus is compared to the per-city generation. If you've just built a few wonders, getting that chopped down is not a big deal...the (7/n+3) factor will outweigh it. If you've built Stonehenge, allied with all the Cultural CSs, and are running Artists in your capital, then adding the second and third city will hurt.
The way puppets factor in is by increasing b slowly over time. This will mitigate increases in n.
In a nutshell:
--If you have ignored extra culture sources, then adding more cities (settlements/annexes) will speed up your policy generation as long as you build the basic monument/temple in each one. At ~10 cities, you've tripled the rate you get policies, but additional cities after that have negligible effect. The first few contribute the bulk of the speed-up.
--If you have built a couple wonders, or just Stonehenge, or allied with a cultural state, then additional cities, even the first few, will have little effect on your policy generation.
--If you have really pushed hard for early culture generation, then the first few additional cities will hurt your policy generation speed.
Some timing issues come into play...try to settle/annex right after getting a policy instead of right before, but apart from that, extra cities don't really have much impact on social policies as long as each new one gets the basic culture buildings and you aren't pursuing an extremely high or low culture strategy.
The 30% penalty may look scary and shy people away from expansion, but it is actually really balanced.