This game is marvelous. Absolutely stunning.
I played the demo back in 98 and couldn't stop it anymore, but I couldn never find the full version here in Brazil.
I could only find the full game (warez...) back in 2005, I guess. Wonderful game.
There is a web site, don't know if it's still up, a community for the game, with news about a new sequel, contact with the developers, etc. But by the time I was checking it, there were no plans for a sequel.
So I started to find similar games, with this kind of micromanagement style. Do you know of any great game like it? I heard of the Settlers series, but don't know if it's really similar... also, does it have any relation with the board game Settlers of Catan (fantastic game, btw)?

the settlers is kinda similar, but you dont train specific ppl, they come with the building. it also has nothing to do with settlers of catan wich btw is on xbox live and i think on the pc.

Indeed the Settlers series is the closest relative to K&M. Most notably Settlers III. and IV. They may differ a little in gameplay (perhaps Settlers being better) but have an atmosphere similar to this game.

Sorry to bring this back from the dead, but some games are timeless...

I love these kinds of games, and searched a lot for similar games. As it turns out, this one was the best (for me). However, try to take a look at the Cultures series, in particular Cultures 2. It has a sort of more RPG feel to it, since every person has a skillset, levels up, etc. The early games of the Settlers series were like that. I haven't played the more modern ones, that seemed to make the economy almost superficial, and not as detailed as this one.

You can also search for: 'Alien Nations' - a bit: parody of settlers, but with a good gameplay.