The city limit of 255 cities is present in all versions of Civ 2, and since it is hard-coded into the game then utilities cannot be built to eliminate it. There are utilities to increase the map size and the maximum amount of cash you can hold at any one time beyond those you get with the game, but this is impossible to change unless they releae the code (see CTP2).
256 is 2^8, and this is the programming code limit. I'm not sure what the limit for unit numbers on the map is, but this is also set and you have to disband to build any more.
Try the "No Limits" patch to be able to play without some Civ 2 restrictions, but I'm afraid that the city limit can't be changed at the moment.
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