We have several existing city sites... the old world spawn, the new world spawn (current spawn anyway), HTP Base, and the Palatine Hill area.
There are several other outposts along the HTP rail line that can be built up, and we have quite a few other surveyed build sites.
One is south of old world spawn maybe .5-1km or so, and another is southwest of new world spawn, between 1.5 and 2km away.
I have started building at the site SW of new world spawn. If you look at the current output.png on mc2.injate.com/maps (right click, save as and open in Windows Photo Viewer... it will crash your browser) - you'll see two "peninsulas" in the extreme south (south is bottom right, north is upper left). You will see a tower and the start of a low wall extending east from it. There will be another tower created on the other side of the bay to the north of the existing tower, and the walls will encompass a fortress. That bay area will be a harbor, and the bay to the west (after we clear it out) will be another harbor as well as public buildings.
Because it is far away (for the most part) from any existing player buildings (Inf's new mine is about 1km or so east), and it's in a chunk spawned from the newest MC patch, this may end up being the new spawn city or capitol.
The spawn city needs to be away from existing buildings, but the capitol does not necessarily need to be.
We may want to centrally locate the capitol, but that's not a requirement.
What sayeth PiCEcraftians?