In Civilization 5, given a situation where you have several desert hexes around a prospective founding location and a few non-desert hexes (e.g. grassland), is it better to found the city itself in one of the desert hexes and be able to immediately improve the grassland, or is it better to found the city on the grassland hex, so that the city hex itself will later get more bonuses? (It will, will it?)
Found on the desert. City centers have a minimum yield (2/1/0), regardless of the terrain its founded on. Thus you effectively convert a useless 0/0/0 desert tile into a useful one.
Also, a city center will only have a higher yield if the base terrain yield is higher than the minimum yield. Normal grassland tiles are 2/0/0, none of which are higher than the minimum yield, so you don't get any bonus. The most obvious example of this effect would be hills (0/2/0), making a city founded on one 2/2/0.