Since the formula for raw production is just the population of the colony (with no exponent or modifier) it makes a lot of sense to have as much population on the planet as possible. Even with the recent introduction of a Synthetic Pop Cap in opt-in 1.1, the synthetic races are still able to mass manufacture excess population by either building huge populations on another planet and transporting them in, or moving population off a planet temporarily to allow the Assembly projects to be built and exceed the pop cap.
A small Approval penalty for these large populations (I usually stop at around 100 population on each planet) does not offset the huge advantages in production with these far over-the-cap populations.
Why not just make production from population cap at the population cap of the planet? All population above the population cap are just unemployed citizens that do not contribute to raw production. That would obviate the huge advantage of building way over the population caps.