Personally, i'm not quite sure what to make of a modern day Vice City. It may be the nostalgia rearing up, but I don't think Vice City could top the 80's. It had a unique vibe, which made the fact it was set so far in the past even more special.
We didn't have a modern GTA after III until IV, conveniently set in Liberty City, which goes with the modern feel of things. Vice City seems to me like it needs to stay in the 80's.
I think the main question is, who would want to drive around Ocean Beach and not be able to listen to "Video Killed the Radio Star" and "Japanese Boy" in succession ;].
Vice City again, yes, I LOVED the original, but leave it in that time period. It's almost magical, out of reach, like an eon ago. For me anyway, considering I wasn't born until 89, so it feels ancient. Anywhere in the 80's would be brilliant.