That's the main problem. Like I said before there is work being done on human-human alliances. That will provide more complex diplomatic options. As far as AI is concerned there as been a positive flood of emails lately in freeciv-dev concerning several people which want to improve on the existing AI code. John Stonebraker did an excellent work in the AI in previous versions.
More volunteers are always welcome.
Units are quasi-independant from one another. When the AI is attacked, in each town, it will build defensive units. Also, the AI is too easy for Freeciv veterans and too hard for Freeciv beginners. We tried to find a middle ground with no success. The AI is pretty young, but it has been far better than we expected at first.