In Civ5, with the former approach, city population growth eventually becomes unsustainable (as with fewer cities, you have access to fewer resources and buildings to provide happiness to offset the growth of unhappiness from population), and city productivity will also eventually plateau (as all tiles are worked on and specialist slots filled). In practice, you tend to fall so far behind your rivals in terms of technology, economy, and military that even a cultural victory becomes out of reach on higher difficulties.