Just had another thought. It has to be completely new, or else you get an extended Liberty City from III, if it had all the same places from III then suddenly theres more land here and there, then there'd be questions asked. 1999 to 2008 there's suddenly more land, you'd think: what?
A whole new start allows a better experience in my opinion, you don't think "Oh this is where Claude blew up _____" and so forth, you have to relearn everything, the layout, you are truly an immigrant just arriving in Liberty City, you don't know where things are and stuff like that. I dunno, there'd just be a lot to complain about if they kept areas from III for IV.