I played many more Immortal games and I've come to this conclusion:
Without walls: the AI is downright brutal. I once had every civ in the game declare war on me by turn 60. They effectively swarm your cities and capture them. I had two games in a row that I lost by turn 100 just because I wasn't expecting them to attack the way they did.
With walls: AIs are timid and almost never come within range. They will wait until they have a siege unit or two (which makes sense), but even then, they can't position them correctly. Once you have ancient walls, you can basically coast to the end of the game.
They need to split the difference somehow. The early game shouldn't be all death, war and mayhem. Peaceful play should be possible, even if it isn't realistic. At the same time, by the time all your cities get fortifications for free, the AI has no more cards up its sleeve and has no way to take the victory away from you.
Barbs just further complicate this whole issue. I made a separate thread for them, so I won't rehash it here. Needless to say, they went the wrong direction with them.
This is more or less true. The new walls system is a double edged sword. It slows down early player zerg rushes so that a super aggressive human player cannot totally steamroll all of the world within the first 100 turns (AI seems to get walls up by about turn 40-50.) However, because walls are so powerful, AI simply cannot handle them if it is against a player who knows what they are doing.
So in sum, the current walls (A) slows humans, and (B) stops AI. The devs might think this is a fair tradeoff for the immense AI bonuses on deity or immortal, but for lower difficulties it certainly would make the game a cakewalk.
Again though, I don't know how they can weaken walls at this point without throwing off the balance even further unless they just make a modifier that makes humans walls weaker on low difficulty setting.