When I hear Seattle the only thing that comes to my mind is the towers and skyscrapers. Nothing really interesting on it. Also Seattle is not so multi cultural city, with 69.5% whites in it and 12% Asians as of majority which makes it no fun..
Example Vice City was known for the Cuban Drug lords, cholos, Scarface, nightclubs and many many other things which could be used in a game.
San Andreas was the home of gangs, even some mafias, Hollywood, corrupted cops and had it's own spirit.
Well Liberty City had almost everything of these above but it was still one of the best came out (GTA 3 not IV!)
About Chicago, yes it is a good idea. However Rockstar should consider taking things from previous games instead of working on a new one from scratch.