And we saw them try that on New Caprica. It was a disaster. Granted, the planet sucked but there were also clear problems getting a real city built and infrastructure in place. It was basically a military barracks with landed ships as the generators.
Perhaps the finale should have made a more overt connection between the failure of New Caprica and the willingness to go full caveman on Earth, I don't know -- but the reasons they made that decision are in the show if you look.
New Caprica would've also been a major practical drawback to trying to establish a modern settlement; anything they could've reasonably needed to build a colony would've been sent down during the year they spent trying the first time, and they didn't have the time to take any of it back with them when they left.
The writers could've nitpick-proofed the scene by having the first reaction to the idea to build a city be "With what?" and then had Lee suggest they should embrace a low-tech lifestyle rather than painfully succumb to it over time, but for all the gritty realism of BSG, it never had the patience to tackle the same problem twice on-screen, and left it to the audience to assume that Water Shortage II: Son of Water Shortage took place between episodes and went pretty much the same way the first one did, and likewise that if the Fleet left behind all their heavy equipment across the galaxy, was stealing toilet doors for repairs, and had one tube of toothpaste left for 30,000 people to share, recreating modern civilization was more likely to end up like Roanoke than Jamestown.