I haven't seen much use of ships except to carry people. I sometimes use ironclads if I can't beat a well defended city (so many attacks per turn!) and I usually have one or two battleships in the modern era. Once the AI crused right up and blew my settlers away then disappeared into the ocean. Poor settlers were just railroading and didn't see it coming. I did play one game where the AI built a fleet of ships and every time I got close enough to see one, they attacked my triremes and sails, sinking them with all hands (full of ground units). That ticked me off, and I lost twenty-something units, but it only happened in one game all this time. Other games I seldom lose more than a single ship.