My understanding is that city upgrade does not limit natural population growth. In manual it is stated:
5.3.10. DemographIcs
There is natural Populace growth, but this growth is quite slow. Natural population growth is positively modified by Fertility of the culture of the Zone and the Health Score. It is negatively impact by a high Civilisation Score." (p. 177)
However in his recent YT playthrough Das said:
"Essentialy the smaller the town the happier population will be to a degree but they won't grow quickly and really the growth is very very important. So when you have got a zone that is happy - uprade. It is essentialy rule of thumb."
Usually, I would upgrade city only when I need higher tier buildings. However, as game progress, I've noticed problem with not having enough workers to operate upgraded public assets. Could it be that, beside factors mentioned in manual which are related to population growth, there could be some additional hard limits linked directly with city level itself?