I try to place cities where they will have the best growth prospects; if there are a few odd tiles uncovered, I don't generally worry about it. If there are a number of them in an area, I might make a city to use them. I usually try to avoid overlap, but I don't go out of my way to do so, and just about anything will override this tendency. If you are not in a democracy this can backfire big time. The AI can send in a diplomat to bribe the city out from under you, especially if it is small (as I would expect a city used for that purpose to be). A fortress with a few units should be sufficient in most cases to deal with enemies (unless they are using lots of bombers against your troops, as fortresses don't give bonuses against air units).