The other point I would like to bring up is the kind of development seen in, for example, this and this screenshot. Look at how the city has grown in those - only one side of the river is being settled (so far), but that side has been built on to it's limit. It looks a bit funny, seeming how people would want to be as close to "fresh" water as possible and should spread out along the river before they start "broadening" it away from the water. It doesn't really look like "natural" growth when it builds mostly on one side first, as it seems to do, judging from the majority of the shots provided.
I can (partially) justify this in Toady's defense, actually.
The town is spreading out from the castle. Look at where the concentrations are, especially in the first picture - they are not only clustering around the castle, but are clustering based upon the shortest "as the road winds" route to the central keep.
In fact, in the first picture you linked, you will see a sparse area right next to the keep's outer walls because it isn't close enough (by road) to one of the gates to access the keep.
They simply aren't choosing to build on the river at all. Maybe they should, maybe they should build closer to some other "job center" besides the keep, but they are at least clustering according to some logic.
Now, the thing is, this seems to imply that everyone wants to live as close as possible to the keep. If we are talking about it as a "job center", this means
everyone works at the keep. This, obviously, seems silly to have a population of thousands based solely upon keeping the keep running. I somehow doubt Toady will actually keep it that way for very long, and hopefully, we'll see more "forces" at play when determining where people choose to settle in a town before long. That way, there could be more desirable locations (like near the river for fresh water or on top of the hill) where the people who have the most choice in where they live will want to congregate, and then the people who are just desperate to get as close to their job center as possible are going to be crammed up next to those.
It also does bring up another point about the density, however...
There appears to be some "packed" housing, where everything is crammed cheek-to-jowl, and then there's "sparse" housing where there is only one house per embark tile. In between these, however, seems to be some strange "sparsely packed" areas, where all the buildings are crammed together, but not all the space is taken up.
Those houses where they share the walls of one house to the other are built because they literally can't find any space to build a house but filling up the spaces between two existing houses.
The better way to model that is to lay out where all the "crammed" houses would be, and then start deleting one or two houses after every house you leave there, so that you wind up with no houses that actually touch one another.