Yeah, I never could make a Navy very useful in the game. The only purpose it ever serves it just transporting land army, and to do that you only need like four or five ships. This really does have negative side effects for the civs that are seafaring or have a ship as a UU. This is in CIV III though, maybe in IV they'll make some changes that'll make navy more important, at least more important later on in the game. Maybe they'll do the thing they did in CIV II where the navy can attack the land units.
One part I never did understand is how does a frigate only have one more attack point then a war galley??? :-\