This is one of the starting Economic Policy choices and is great for an overall boost to city Production, enabling you to mobilize military units to handle Barbarian incursions and create Settlers and Builders to facilitate early expansion. However, if your Capital is blessed with tiles that provide extra Production (e.g. Plains and Hills), it may be more practical to use God King for monetary and spiritual gain.
Note that Urban Planning works for all cities and purposes, unlike God King, and may turn out to be invaluable for boosting newly-founded cities from your first expansion effort.
According to archeologists, there is evidence of urban planning – or at least something more than haphazard building – in a number of ancient towns found in Mesopotamia, Egypt, and the Indus Valley. They have uncovered paved streets laid out in a grid pattern, and from the 8th Century BC onward most Greek cities were laid out on orthogonal grid plans. But it was the Romans who were masters of urban planning – far more so than other civilizations. Roman city planning focused on military defense, public convenience, and ease of transport through the streets (connecting to those nice roads). As Rome declined, most of these nifty ideas disappeared for a time, although the great European cities still surround a Roman city center.