In that very important sense diplomacy has been removed.
No, it's just been shifted elsewhere. Which is fine, because an A.I. should never give a win away, imo.
In fact, the shift in diplomacy is almost completely transparent in the sense that city-states are essentially an evolution of civ4 diplomacy.
-clear-cut view of how much they like you and what state they're in.
-leave them alone, and someone else will claim their friendship. like religion; leave it alone, religious blocs form against you. Your neighbor could've been budhist like you, but instead he's Hindu like your enemy.
-Make excellent "trade" partners. Granted, there's no trading, but you could rob super-friendly A.I. civs blind in civ4, especially in the area of tech trades. In it's place, City-states offer static benefits: A Thematic boost to your civ and a couple of resources.
Hell, it even replicates the fact that you have visibility around their city.. just like civ4's religion system.
Personally I think diplomacy is very much alive and well, and city-states have enhanced it. Here's a scenario that I found awesome;
~Two-city states have a dispute with one other one. Meaning wiping out that one city nets me two allies. Sweet deal right?
~So I gather my army, head to it's borders and declare war ready to get an immediate boost.
~Russia and India come along and say tell me to remove my troops from the territory of the city-state. I say no and take the city-state.
~A few turns later, Russia and India declare war on me.
This would be nice, if their reactions would mean anything. They know you are a lier, but since they would declare war anyway no matter what they think of you, this aspect which could be cool added to a relation system, is also nonesense.
See, it depends on what you define as "matters", if you mean in the "pals for life" sense of the word. Sure, it doesn't matter. But as a ward against ill relations and war, it does. Let's take a simplified example... Let's say that on average, every A.I., even Ghandi, will declare war on you in the life of a game by turn 300 no matter what.
Does that make diplomacy irrelevant? No; it changes the purpose:
A.) Diplomacy serves as the means of which prevent the A.I. from declaring war until those 300 turns have passed. Because if you don't play along, it's likely to provoke an A.I. sooner... if they are in fact going to attack you no matter what. But bear in mind I had an entire game where I shared a continent with Monty and he never tried gobble me up. We were "friends" the whole game.
B.) Within those 300 turns, milk the A.I. for as many benefits as you can get. Primarily Gold and research pacts.
Take my Russia and India example above.. I had Pacts with both, and had done many a research pact and resource trade... Essentially, the 3 of us were best buds. In the life of the game, would they have attacked me at some point? Possibly, probably. But who knows when that point would've been, especially since I was larger than both of them combined. However, due to my choice, I suffered diplomatic penalties... They teamed up on me and instead of 2 city-state allies costing me 1 conquered city-state, it cost me a two front war with two Civs instead.
So if you're definition of "not matter what" is during the life of the game... then yea, you're right. There's no way to deter A.I. from attacking you if they "choose" to do it. However, I think it's false to claim that working the system doesn't affect their decisions in some way. Having a friend for 100 turns because I played nice, is far better than have that same friend for only 50 turns instead because I didn't care about the system at all (Such as, the key example, lying about your war declarations).
But from here on out I'm just gonna stick with possible tips since the debate on the system is irrelevant. Some folks like it, some don't.
