I learnt the hard way (like the OP) that "occupied" city status meant the city would not grow (having a conquered city on a river in the middle of grassland farms at 2 for 100 turns did not seem right), even after the pace deal was signed.
If they removed this, (or if a bug removed this), indeed the city cesion seems nonsense.l
I found this a "logical" representation of real politics - if a civ ceded a city it is supposed it renounces to any claim over it (and its citizens start thinking they are your citizens now, as there is no hope for reconquest). If a city is not ceded, however, it means that even peace is signed the original owner continues exercising "cultural" influence, there is resistance in the city to being in your civ because of hopes of a future war or deal, and therefore something does not work correctly (why it is growth, well, that's another discusion).
If there is no penalties for not getting the city cesion (or even if these are only diplomatic ones), It's prettly much a wasted mechanic.