Although unsiegeable city locations may be frustrating for other players, I don't consider them a form of cheating. Consider that the player has limited him/herself severely in terms of the population that can be supported in the city -- with only 5 food tiles and essentially no sovereignty opportunities, the maximum population such a city can support is well short of the maximum population or of the population average needed to support a 10th city. The city would also be severely limited in its ability to maintain an army or diplo units.
It is indeed frustrating that a rogue player could place a city on such a square and have limited vulnerability to siege attacks. However, there are a number of other tactics that could be applied to such a city, including raids and the full range of diplomatic attacks -- thieves, assassins and saboteurs. Raids made using siege engines could effectively level such a town, although they could not technically raze or capture it. Certainly they could prevent the city from being used effectively in an offensive manner.
The eventual addition of naval units (at a much later time) will leave a player with cities on islands even more vulnerable, and with fewer avenues from which to receive outside assistance.
A person who settled such a square might feel self-satisfied at accomplishing being "invulnerable" However, he or she would have gravely miscalculated.
Edited by Rill - 17 Oct 2011 at 00:39