I have just razed my first city ever! It was the city-state of Valetta perched on the island of Malta in a Giant Earth map. I am playing Rome and with Carthage and Valetta right there in the way of my Mediterranean expansion, I actually declared war (unusual for me). Carthage I kept, but Valetta had no real value in such close proximity to everything else.
As a general practice, however, I never raze cities. I either liberate former city-states, or keep cities (annex) of rival civs. I rarely see such cities flip, however, so long as I am well prepared. If the taken city is too far from my influence, then I just return it in the peace deal.