Defending with Knights?

Then your best defense is to use the knights to attack any siege you get against you or targets of good value you come across. Later you might want to build some t1 knights for shootgun tactics on sieged/blockaded cities but generally having lots of t2 knights is your best defense, and having only 1 type of units will give better value out of the cost reduction buildings. If you get to 9 or 10 cities one day then you might have the knowlede and insight and location to be more specific in each city but until then t2 knights are your best allround unit. Just remember, never have units in a city under attack if you can avoid it, only fight if forced or you know the odds.

 My choice of building units suited for attack or defense have more to do with coordination with my overall alliance, based on the strengths of my race and cities.  So as a human I tend to build more cavalry because that's what humans are good at.  Dwarves in my alliance build infantry; elves build ranged.  (That's speaking very broadly; most players will maintain at least some of the various types of units to avoid being in the position of for example sitting on cavalry for a whole war when nothing is happening.)

The time I look at production cost per unit of attack is mostly in hunting NPCs, as you noted.  I tend to use t1 chariots for this purpose, since I am mostly surrounded by plains; if there were more forests, I might use more swordsmen.