I don't think you can found new cities perse, but you can decide whether they'll become populated, money making trade centers (cities) or a military focused castle.
Sieges are definitely common place, but it's much, much easier to get into a fight outside of a siege with the new map style that Rome brought in (and it looks like M2 is using the same idea). I actually don't really mind sieges...it's just that it seems the AI is rarely willing to do an offensive one unless it has a huge numbers advantage. This is probably smart from a unit preservation perspective, but it'd be nice if I wasn't always bashing down the walls on a siege, and defending them on occassion.
It seems like the "cities" will be more Rome style city fighting sieges, probably with a town wall, with the Castle being huge, multilayered walls (go go Citadel!). I'd love to have some epic sieges take place...but they just don't seem to happen too often. Why press forth when you can just hang out and let them sally forth and fight on the defensive.
I know they are trying to allow for more variety in diplomacy, and are also giving you an indicator as to whether or not the trade is balanced, generous, or demanding. You'll also have an idea of what their situation is like financially, and militarily (hopefully this info is based on spies and whatnot), and you can make a more demanding trade if it will take advantage of a weakness (Offering even just a bit of money to a broke nation is potentially a good idea, even if it means "losing" the trade).
I have mixed feelings about founding new cities, because I think it'd be too easy to just have the map cluttered with cities. If you thought it was siege centric before, imagine if you have a few extra cities to go through!