The G-films in the '70s very well follow "Destroy all Monsters." Like Skye said, the aliens destroyed the control system on Monsterland in "Destroy All Monsters" but the monsters roamed free there afterwards because they knew it was their new habitat, hence they could roam in and out in the later films. One thing that throws some people off is that "Destroy all Monsters" was set in 1999, while the films that follow were, assumingly but never mentioned, set in the year there were made (1970s). Also, the other thing is that King Ghidorah, after seemingly killed in "Destroy all Monsters" returns in "Godzilla vs. Gigan." But, like so many other reincarnation of other monsters, it could return to live or is another species. After all, this is sci-fi. Save to say, although loosely connected, all the films in the Showa series are connected and the storylines should flow in the years the films were released chronologically.
Again, "Destroy all Monsters" was meant to be the last film, but seeing how successful this particular film was, Toho decided to make more. But, like gmegalon said, because the producer didn't like "Godzilla vs. Hedorah," he decided to make a "truer" Godzilla movie, and thus, brought back the familiar foe King Ghidorah.
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