Slight overlap (so that you don't loose any tiles) usually works best for me. But I have to adjust this to terrain, i.e. mountains and so on, and I try to skip deserts since in my mod they give 1 prod when mined, nothing else
It depends on what your goal is. Early in the game tight cites are the best because you only use a few squares for production. This is counterproductive later in the game when you can build larger cities though. I vary it depending upon terrain. I like to make sure I leave no productive square not producing, but if I am trying to win a quick culture game I pack them in a tigh as possible.
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