It serves two very handy uses. One: you can get a quick boost to your cash flow by switching to cap. Two: in a large game when a city has built all the improvements it needs, ( For example, there is no reason to build a barracks when the ai is reduced to one pet city) and all the wonders are built and your spaceship is enroute to AC, and you don't need anymore units, switching the city to cap lets you ignore that city for the rest of the game. (This is very useful when you are managing 200+ cities)
This also assumes you don't need freight from this city. (When you are dealing with that many cities, you can be very picky about what freight to build, like Uranium only). And you are not using the FCT.
IIRC, Starlifter had an excellent post on Capitalization in one of his threads a couple of years ago, I just don't remember which one. Maybe someone who does could post a link to it.