Actually Settlers were only a limitation in the pre-industrial era. For the rest of the game, unless you played with too few civs for the map size, there would be no space left for many new cities; you'd be conquering cities. The cap to expansion was battling against the culture of captured cities and being able to protect an expanding circumference of borders in the age of naval and air warfare.
It's true they needed to add checks on expansion, but they should have done it by expanding on the checks already in place, then looking at the real world to see what brings large empires down. It's mostly common sense - cost of bureaucracy, difficulty keeping cultural and political cohesion in a vast decentralised system, resentment and fear from your neighbours and so on. Instead, they removed what details existed in Civ 4 and just made one single number, happiness, govern your whole empire.
This is the kind of arbitrary simplification, with complete denial of reality, that really irks me about the game. It's just designers coming up with the laziest way to solve the problem. Supposedly this is meant to reduce micromanagement, but it doesn't, since you need to build happiness buildings in each city anyway. If happiness is one number and is supposed to be global, then controlling happiness should be global as well. As it is, even though this one number does the job of capping expansion, everything about it makes no sense. In a real world setting, it would seem building a colosseum in Moscow makes people just as happy in Vladivostok. But if someone decides to plop down a settlement in Siberia where more oil has been discovered, the entire country could go on strike. Preparing for war has been turned upside down you no longer build up your industrial might, in preparation for churning out replacement troops faster than your enemy - you need so few troops now and loose so few. Instead you build happiness buildings so you can annex as many cities as possible. Sure in Civ 4 you had to beef up your happiness to combat war weariness, but that was realistic and only mattered while you were at war. In Civ 5, it matters after the war, as if all of human history was anti-imperialist. As I said in another thread, I don't recall hearing about Alexander fretting in Babylon after hearing about production and procreation in Macedonia coming to a halt because of all his conquests, or Great Britain constructing colosseums all over the island in preparation for conquering half the planet. For most of human history, happiness was expansion. Ethnic and cultural pride was all they had.
Happiness is just one of the many arbitrary simplifications that has meant, for me, this game has no relation to actual civilization in anything but name. It's just an abstract Euro boardgame to be solved and optimised. Euro games are fun and intellectually stimulating as far as boardgames go, but I expect something more out of empire building computer games.