Yes, I'm inclined to agree that having diplomats as real pieces on the map isn't necessary and an approach more like CIV 4 would be more beneficial to all involved (including the AI). Moving diplomats great distances round the map is a little tedious and it would greatly help the AI if diplomacy between factions isn't so cumbersome...

Spies, assassins and priests, however, with their less essential and yet more specialised roles, should be represented as real pieces. One thing we learned in Civ 3 was that the removal of the spy piece was not a great gameplay idea.