Settle on the spot. The extra production from settling on a plains hill is a nice boost. Also, the map generator tends to give you decent resources for your capital, so I almost always give the "blue circle" the benefit of the doubt for starting positions. There's a decent chance that there's a horse or copper resource waiting for you that I wouldn't want to miss.
I can see the argument for moving 1N (getting the seafood in the fat cross), but doing that loses you 3 choppable forests and the plains hill bonus, besides any possible revealed resources as described above. Chances are good that a second city can use the seafood, and with deer + 2 flood plains you won't be hurting for food in the capitol. I'm also not sure whether 1N will be considered a fresh water location or not, though as long as the city is at least coastal that's not a huge deal to me.