Perhaps you mistook some contented citizens for happy ones?
I just finished my game with a space race victory. I over ran the babylonians with tanks and I built all of the happyness structures that I could and got as many luxuries as possible. WW hit some of my more less developed cities but other than that I was able to take the babylonians down without a problem because they had fallen far behind on tech.
Then the Germans tried to invade me but I used ICBMs, which was a mistake, to fend off their invasion. Every nation went to war with me as soon as I launched the first one. However I was able to use washington to build my spaceship while all of my other core cities produced ICBMs to fend off incoming armies and ships.
Germany also tried to bomb washington but placing a few f-15s and mobile SAM batteries in it took his bombers down nicely.
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