Yes, if you run out of space on the planet, you should go "vertical" and upgrade cities. Not much can be done about upgrade trick. The alternative been to raise the upgrade cost but then you will have to scrap the painfully build expensive cities to replace them with megapolises.
In my previous post I was referring to this scenario: you have a new colony with say 15 slots. You can either build cities or build city, upgrade it, build second city ... The former approach is more profitable but at the end you finish with 15 cities and it will take a century to upgrade them all
