I think what most people are failing to recognize when it comes to the 1upt argument is that land, itself, is a resource. It's limited, and you can only do so much with it.
What is sorely lacking in Civilization 4 is the idea that terrain matters at all. Yes there are some conflicts that happen outside cities, but, by and large, combat in Civ 4 involves bringing a huge stack of units up to a city and attacking it. Forget forts, enemies walk right on by them. Forget the natural choke points that land can provide, infinite units on a single tile render that pointless.
The only way that you can ignore that 1upt is going to be a vast improvement is if you simply hate the idea of positioning your troops in a superior way, on superior terrain. The example I love to give is forts. Forts in civ4 are largely pointless. Oh sure, everyone has one story of when they built a fort in a great spot, but largely, pointless. Now, change nothing about the fort, and just put it into the combat system of civ5, and they become amazing. A fort, on a hill, with a ranged attacker on it becomes DEVASTATING if you attempt to attack it, doubly so if you can't surround it because of mountain ranges and such.
My guess is that combat is going to become what combat actually is; a fight for land. When you win a tile, you won't want to give it back. The city is the end goal, certainly, but the land is what's far more important. That's never actually been reflected in the civilization franchise in the military game.
Oh, and to the people who're terrified that the game will always devolve into a bunch of units mashing into each other. Imagine a few well-entrenched forts with archer-style units inside of them creating a series of kill zones. Enemy unit moves into the tile directly in front of a fort, cannot keep moving because of the Zone of Control, next turn, gets obliterated by ranged units. Repeat ad nausium. You can add in some mounted units in there just to clean up any kind of mess that might occur. They can't run past your stuff because of the zone of control, and they can't safely assault your stuff because it's suicide. Glad they have a ton of units behind the line to replace the ones that just got slaughtered.