Well if you remember the movie Michael left New York and went to Nevada. So I think that's why you become Don of New York in the game. Michael left you the family business in New York.
My theory is this. Godfather Part II comes out just like the first game there is and opening story line. It starts out with the Michael meeting Carlos at the house he gets him to tell the truth then you Fat Clemenza get in the car pretend you are are putting Carlos on a plane to Nevada and kill him in the car. Michael flies to Nevada then after Clemenza dies of a heart attack Michael calls on his best man in New York for help with his Hyman Roth deal. I really think they can do a lot with the story line and visit a lot of new places. You can help Michael buy out, Casino, fly to Cuba, and of course be the one to wack Fredo.
This is just one way to take the story line the other could a new character. Let's say your a childhood fiend who works for Vito Corleone in New York. Which will include the Backhand story line from the movie and the deleted scenes when he went back to Sicily and killed off all the men involved with killing his entire family.
Mr personally I'm greedy I want it just like the movie. Both story lines at the same time.