Don't build a castle until you are sure you can protect yourself (and get a second city asap).
In order to get a second city, you need monnstones (50k from each resource, can be build in a lvl 10 Moonglow tower). Next you'll need a lvl 10 temple to recruit a baron.
After that you can decide to found a new city (from scractch, you can decide where and you don't need a castle for that) or to conquer another city (you'll need a castle and the new city will keep the castle as well).
In the beginning I would go the peaceful way, so you have at least 1 or 2 cities you can fall back if your main city is being conquered. Also make sure you have at least one city close to the water, so you can get trade and war ships.
There is also a really nice tool to plan city layouts, I use this all the time:
http://www.lordofultima.com/en/forum....php?tid=40077
A normal city for me has these stats when maxed out:
20-25k wood/hour
18-23k stone/hour
5-8k iron/hour
5-8k food/hour
1500-1800% construction speed
3-4 markets
2-3 harbors
4-5 Townhouses
Later on some specialized resource cities make sense. This my main city on Server2, new ones are better already:
http://starside.de/lou/lou_s2c1.png