It sounds like you're looking for some old-school Molyneaux. I would look into Populous or its modern "spiritual successor", Godus. It doesn't quite get down to the personal level for each individual character, but you do guide the civilization as it grows and matures, as well as defend it as needed.
Someone mentioned The Sims, which is pretty much what you described, but I would suggest going further back in the series, specifically to a game called SimAnt. The characters don't have personalities to speak of (because they're ants), but the game engenders a feeling of attachment to your colonies and swarms like no other RTS/management/god game I've ever played... though I admit I've never played the Black and White series, which I hear is also good at that.
Similar mention should go to classic SimCity as well. As you may or may not already know, SimCity's primary building method is through zoning rather than specific placement, you create an area where things can be built and the people build on their own according to the zone (residential, industrial, commercial). Sure, if you need a specific building, you'll have to place that yourself, but other than that it's automatic and scales to your city's prosperity. SimCity 4, specifically, expanded the series with a "street view" mode that lets you sort-of interact with the people, following them around and seeing life through their eyes.
Side Note: The most recent SimCity, if it ever gets its shit together, would be pretty much ideal based on your description... in theory. But, I simply cannot recommend that game in its current state.
Others have mentioned it before, but you might also look into the Divinity series, specifically the latest entry: Dragon Commander. Divinity: Dragon Commander focuses more on politics and story elements, with a heavy focus on characterization and grand strategy over physical building. (more Risk, less SimCity) The actual combat missions/mechanics can become rather tedious once the dazzle of being a freaking dragon with a jetpack!! wears off, but thankfully that's not the primary focus of the game.
For a slightly different perspective, why not look into Terraria? This is more literally a world-building game, wherein you gather resources and craft them into various useful and/or decorative objects. Unlike similar games, such as Minecraft, as you build your little shanty-town (and complete certain objectives), various helpful NPCs, each with distinct personalities, will move in and occupy any suitable homes you build. Terarria also boasts Zelda-style zones and boss fights, with high emphasis on crafting gear and weapons.
Obligatory mention of Fire Emblem... I know, you said you were looking for more city management and less RTS, but the Fire Emblem series (and pretty much any Atlus tactical games: Final Fantasy Tactics, Tactics Ogre series, etc.) are just damn good games. They put some serious effort into making "you" a major part of the story, rather than the disembodied "Hand of God".
I can recommend a little indie title on Steam Greenlight called "You are Not the Hero". It's set in the stereotypical medieval fantasy RPG world, but casts you as a townsperson in one of those games, as opposed to the "savior/destroyer of the world". You are tasked with building a thriving NPC village and occasionally have to deal with the aftermath of epic battles between good and evil. This game is not quite finished yet, last time I checked, but the demo looks promising.