It seems a bit weird that upgrading the mayors house only upgrades its storage, surely if this is an upgrade it should upgrade population growth and its internal population limit as well.

What i am suggesting is that we increase the pop growth by 25% for each level and up the population by 25 or so for each level

OK, in order to balance the game, it means you may have to move level one to 20 minutes per settler, and maybe decrease the population in it a little

but it makes upgrading the mayors house more cost effective and seems to make more sense.