For a truly effective use of nuclear weapons, I find spies essential. The turn that you launch your nukes, steal their plans and find out where their major unit stacks are. If you're in the middle of an inter-continental war, try to find loaded transport ships since oceans can't be polluted. Granted, if you're going for a straight conquest victory you can disregard polluted land completely and just raze everything but that is rarely practical.
I generally order nuke targets as following:
1) Strategic Resources. With the 3x3 burst radius of nukes, its fairly easy on up to large sized maps to take out the enemy's key resources with a minimal number of nukes. After this, your foes will have only a limited number of higher tech units. After the initial engagements, you're likely to be fighting riflemen and guerrilla battalions. Its worth noting that the AI also places a higher priority on cleaning the ensuing pollution so they'll be crippled for years. The only downside to this is that
2) Naval Convoys (maps in which navies play a large part only): If you have stolen plans and see a large number of transports headed your way, consider making this your first target. If not, blast the enemy naval stacks into oblivion. If they're in a key productive port city, all the better. While nuking a city is painful to diplomacy and points gained (civilians give points), you gain the benefit of taking out an industrial center, a navy, and defensive units in one stroke.
3) Large land stacks: If the enemy has large stacks of land units on the map, take those out next. If they are in a city (which unfortunately they almost always are), consider planting your nuke on the square next to the city instead of on the city proper. This will still have a detrimental effect on the units and can leave a trade route into the city.... normally this would be a bad thing, but you've hit their strategic resources already right?
4) Luxury resources: By this time in the game the staple of every nation is its large industrialized cities, filled with cramped civilians just trying to make it through the maddening process of life. These citizens would delight to throw off the chains of their ever-oppressive government, especially one that got them into a war that took away such things as fine wines and furs. But seriously, in large cities that can't support themselves without happiness bonuses, cut off all outside sources. This should cause some production loss and potentially population loss. While this is minor per city, against large empires it adds up. If the enemy nation is democratic, this coupled with war weariness can add up for a tremendous effect and potentially a great sue for peace offer.
Your nuclear weapons strategy should be the same as the United States' during the Second World War, use only if necessary. This necessity can be varied, be it that your troops are far abroad and you get dogpiled, or that with your current forces only a defeat or Pyhrric victory is attainable. It can't be emphasized enough that damaging the enemy combat ability, and not their cities, is the first priority. No one wants white-elephant, completely polluted cities as a reward for hard conquest.
Also, once nukes come about, consider having a few subs with missiles scattered about, if the enemy hits your major cities and wipes out your warheads, you'll want to retaliate. Lastly, if you have a large nuclear stockpile and only have one remaining opponent, press the metaphorical big red button... with one AI, your diplomatic situation is irrelevant
Hope that helps!
