Army Raids, army Attacks and diplomatic attacks can set a city back, but only Siege can destroy in days what took weeks and months to build. Sieging is important because it allows the removal of unwanted (by both players) cities and taking over inactive cities instead of using settlers to start a new city. But I think most players are really discouraged by the thought of their cities being sieged, as is evidenced by how sieging is used to run players off the game.
One option would be to have technologies that allow you to make anti-siege engines, like some people have already described. I also like the idea of the saboteur being able to destroy or temporarily disable siege engines. Some have suggested slowing down sieging to give other players more time to save the town.
Personally, I'd suggest
allowing the ranged weapon units in the town to get "safe" hourly volleys against the siege camp (and the armies reinforcing them on that square). So each hour the siege engines get an attack and all of the basic and advanced ranged army units (and maybe the spear units?) get a 1/3 power attack against all of the armies on a siege camp square. (So not quite like Raid or Sally Forth.)(Also, if there is more than one siege camp, perhaps each siege camp is attacked, but the attack would be 1/3 total ranged attack power divided by the number of siege camps to determine the power of the attack against each siege camp.)
Also, the defender ranged units automatically start their attacks the moment the siege lands (so 12 hours of hits before the siege units are completely set up and can attack in return). Since defending units aren't actually leaving the city, they suffer no damage themselves (or only very minimal damage). This is more like a "real" siege, where most of the fighting occurs without the defenders actually leaving the city. Sally Forth would still have it's purpose, as well as other current strategies.
Suddenly, the elves have a big advantage. But I can live with that, and I play a human.
Here's another idea I had, but I'm not sure I'd like how it would change the game. Plus I suspect that it would encourage people to be rude because they were "safe." The idea:
Perhaps King Sigurd could get involved by offering his Protection against siege to those who wish it. Players could choose to ask for this Protection on a city-by-city basis (so a player could protect several towns, but leave others unprotected).
When a city is under this Protection, that city can't be sieged. If another player tries to Siege or send an army containing a siege engine to the city, they will be told that this isn't allowed because that city is under King Sigurd's Protection.
But this Protection doesn't come free:
1) Like an alliance tax, every city under this Protection must pay a tax on their city's income. They must have a 25% or higher tax, and 30% of their income is collected by King Sigurd's collectors in return for this protection.
2) All siege engines in the town are destroyed. The Barracks are de-leveled to level 19 (if it was above that), level 19 becomes the maximum level of barracks that city can have while under the Protection, and Siege Encampment is unlearned. (If you leave the Protection, you will once again be able to upgrade your Barracks to level 20 and re-research Siege Encampment. But they are removed when you are under Protection so that you will be unable to siege others while you are Protected against sieges. It also delays your ability to siege others when you come back out of Protection)
3) There is a 14 day delay for this Protection to come into effect. Also, a player currently under siege can not go under this Protection. (As in, you can't go siege someone or provoke someone to siege you and then go under Protection. This Protection is to help people with a certain play-style to stay protected from those with a different play-style, not to protect aggressors from the consequences of their actions.)
A modification of this idea might be that the Protection isn't complete. It would costs less in taxes, and your city could only be sieged for a limited amount of damage--like until all of the buildings are down to level 12.

The archers are still my favorite. It'd help balance siege warfare, and siege warfare needs balancing.
Edited by Mara Zira - 10 Oct 2011 at 21:55