As you upgrade your planet from one citadel level to the next, you never lose any of the useful features of the lower level citadels. A L4, L5, or L6 will still have the Q-cannon of a L3 and military defenses of a L2, for instance. That doesn't mean there is never a risk in upgrading, though. The turns you use to haul in colonists or products may not be worthwhile, as there is no sense in developing a planet you can't defend. And a planet at L4 or above is at risk, in that someone could invade and then Twarp the planet away. So you might want to leave a planet at L3 until you are comfortable that you can defend it.
 
The game gives planets to players when the first join. I don't recommend keeping that planet. It isn't likely to be in a defensible position, it is not worth much since a genesis probe will create a new one easily and cheaply whenever and where-ever you choose, and when the game starts, you can't afford to be defending a nearly useless planet. Here is what I do with those freebie planets... I move all colonists to fuel production (to maximize fighters, primarily) and then ignore it for a day or two. I'll keep a note on where it was, because I expect someone else to capture it, and I'll need to blow it up before they develop it to L2. If no-one does, I'll occasionally go back and pick up the fighters that are produced there. A long term goal is to keep anyone else from having a strong planet, while developing one (or more) myself. So I'll be finding and destroying planets when I can, the sooner the better.
 
Usually, it is one of those planets that I'll keep for my own... One that someone else has already brought colonists to. No sense in me using my turns developing a planet when my competition will do it for me. :^) Don't forget, Ferrengal is out there, and it starts the game as a L3. You can't ignore it, or someone else will invade it and get a good planet. But you don't want to hit it before you are ready, either, or you won't be able to defend it. If someone else does invade it first (and sometimes if they try and fail) then you should usually hit it hard and fast, before they have a chance to build defenses.
 
Watch the daily log - you can see there if anyone attacks or captures it. I generally want to develop and defend only one planet at a time, until it reaches L6. That keeps me from spreading my defenses too thin. In the meantime, any other planets I invade I will simply blow up. I only need one (extras are nice, but you NEED one, for the citadel interest, and for Planetary Trading) and the others I want to be sure don't go to any of my competition. After I have one well developed, I'll worry about developing others, usually one at a time.
 
Citadel interest is important. You gain 2% a day on the credits stored in your citadel treasury. With a large treasury, that can mean making more money than you can make any other way - and making money this way leaves you all your turns to hunt your enemies and their planets.

I sometimes use fighter farm planets, though. Have you noticed that the number of fighters generated on a planet each day varies depending on the number of colonists and what product they are working on? By using colonists in the area of production that develops the most fighters, you produce the max. number of fighters per day for the number of colonists.
 
When a planet starts getting too many colonists, I'll create a planet and move the extras to fuel production on the new planet. I have no intentions of developing this planet, or doing any serious defense. Generally, these planets will be in the same sector as my primary planet (to save turns moving the colonists) and I already have some sector level defenses there, which is enough for the purpose. Several of these planets producing 300 fighters a day or more, every day, add up. And it doesn't cost much to set up the system, or leave you at significant risk. Also, if later you decide to develop some of these, they will have lots of fuel for Q-cannons and Twarp drives. :^) Your primary planet should usually hold colonists in all three areas of production - fuel, organics, and equipment.
 
When you are developing a planet, you want to develop it as fast as possible. You can move colonists to the planet and let them produce the products needed for upgrading, but that is very time consuming. I recommend hauling in organics and equipment from a nearby port. Otherwise, it takes so long that anyone who is looking is very likely to find and invade your planet before it can be defended. As one upgrade is taking place, I try to plan so that when it is finished, I already have all of the colonists/products needed to start an upgrade to the next level.

If you are developing a planet and will be needing more colonists, bring them in before you haul in organics or equipment. That way, they start producing fighters & products as soon as possible. If you invade another traders planet and don't intend to keep it, consider moving colonists from his planet to yours, instead of getting colonists from Terra. In many cases, you can haul them using less turns that way. Turns are, in many ways, your most precious resource.

Good luck - Stephen
 
NEVER put more than 4.5 bil credits in a citadel because it will lock you out in order to prevent crashing the game. (AX.BBS/TW.NET - ML:The Emperor@DCI, 6/25/96).