Conquistadores are not specifically for settling. They're for grabbing territory on a foreign continent. They are self-sufficient traveling to that continent (barring massive naval might), they are well-equipped to conquer cities on that continent (with a city attack bonus relative to the Knights, which makes them effectively a stronger, more mobile Longsword on offense), well equipped for exploring that continent, and they can grab spare land if there happens to be a good site that isn't already claimed.
It's a total package deal. If they were just settlers++, they'd be awful, but as a unit you can spam out to go colonize some other part of the map, they work well.
Spain's real problem is that if you're not willing to DoW some random city-states or other empires for a simple land-grab in the mid-game, their bonuses aren't worth much. And the way the game is structured now, if you're playing to conquer, you'll do it in a more systematic way, taking out close empires first, further empires later. If you're not playing to conquer, you don't want the huge diplomatic hits and the happiness/culture hits you get from expanding. If you're playing to win at all, you don't want to do the thing that Spain's unique stuff is built to do.
The basic problem, imo, is the victory conditions, NOT Spain itself. If they ever release the C++, I'm going to try and rework victory in the game to something that doesn't have these negative consequences.
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