Unsure if this is a bug, but I hit the pop cap in a city, and was unable to replace any improvement with a hut , because it would make my city "non-contiguous" Makes no sense that every tile would do that.
My suggestion would be that when you click (or right click) on a city, it should take you to the city improvement screen, kinda like Civ 4. It can be cumbersome right now, especially when it comes to replacing buildings.
