Yeah, they will have to adjust things a bit for geography, but the idea of getting the rivalries baked into the divisions is not a bad one.
Not that it matters anyhow, but for the way they have it so far, I would suggest moving us to MIN+CHI and add DAL, SJ to CGY+VAN+EDM, and LV+ARI TO LA+ANA. Then NSH+DET+STL+WPG (never happen, but another flaw in the logic of the game). TB+CAR+FLA+WSH. CBJ-PIT-PHI+BUF, NYI-NYR-NJ+TOR, and the one the have completed, OTT-MTL-QUE-BOS. There are some swaps needed in that still, but it would be workable.
My personal off the wall suggestion for 32 team realignment would be to do 4 conferences, trash East/West and have top 4 in each play off, then 4 winners play off.
Make the Canadians happy and have VAN+CGY+EDM+WPG+TOR+QUE+OTT+MTL....guarantees 4 Canadian teams in the playoffs every year, and one always makes it to the Final 4.
Next up would be the Sun Belt Conference... ANA+LAK+ARI+DAL+TBL+FLA+NSH+CAR.
Then WSH, NJD, PHI, PIT, CBJ, SJS, STL, and COL and the Central.
Finally, Las Vegas slots in with WPG, CHI, DET, BUF, BOS, NYI, and NYR.
When Seattle gets its team in a few years, it will be moving from FLA or ARI most likely, so they would take the LV slot in the Northern US Conference, and LV would move to the Sun Belt.
This way, no team has as big as an advantage for travel (and the corresponding UFA draw). The Canadian teams don't have to worry so much about the exchange rate, as most of the competition will be facing the same hurdles. Las Vegas gets some prime scheduling at first to help build the fan base (as long as they can avoid getting blown out too badly). All conferences send half the teams to the playoffs. Schedule would be a home+away against every team, another home+away against conference, and 3rd games against rotating conference, for a total of 84 games per season...teams that host the odd inter-conference game one year visit that conference the following year, so after 6 years, every team has played a total of one extra home/away with all out of conference teams.
Bound to be holes in that, but at this late hour, it seems to make sense to me.