...don't allow this.
edit: I just realized what I tease this would be for users hungry for more info on the game. I promise to put something of greater significance up in the next week.
But seriously, that's a horrible starting location
But... but... but... how did that city end up there? Did they destroy everything on the island to get materials for it? Is that why the island is bare? Is it the remnants of a long lost civilization, the last fortress of a once grand empire? Was it stranded there by the Cataclysm? That picture raises so many questions about the origin and reason (or lack thereof) for building such a big city on such a bad looking place...
Oh, and they would be more screwed than if they started on a boat. At least a boat can move. And I don't see any docks in that picture, so they won't be going anywhere anytime soon...
A starting location like this wouldn't necessarily be bad if lots of resources exist nearby. For instance, if you could turn it into a major port, or if you had just a bit more land with some useful resources. Turtles might love it. I'm sure Gondolin wouldn't have looked like a good starting location, but it worked for a few hundred years.
In Civ 2 I once saw the French with a starting position like that. Not one solid square. One one invaded them though and they were so far behind. It was funny though.