And if the Simulation was to break you, and since the onlye SR3 gang that appeared on the game was The Morningstar, why didn't the game take place in Stilwater ? It would have made the most sense.
Not necessarily, Steeport is also a Saints controlled city so why not Steelport ? (the real reason being that Steelport was already done in the SR3 engine)
As for the Morningstars, only they appears because the gangs came out of Gat's mind, and he only knew the Morningstars before being captured