Aside from the greater number of Progenitors (language isolates) a linguistic approach would produce, a rather interesting and much more significant gameplay difference would be in the assignment of certain language families versus the ethnic makeup of those families; Japanese is made Austronesian (though I must admit I'm still having trouble getting my head around that ethnic connection) in my plan, while a linguistic one would have it (and Korean) either as Progenitors or rooted in a Proto-Altaic Progenitor. Similarly, Spanish would be closely linked to Roman despite the relative lack of genetic affinity between these peoples, and the Americas/Africa could prove a real basket case.
A particularily interesting illustration of this distinction comes in the requirements for the New World colonial cultures; linguistically, American English is a derivative of British English, but on an ethnic level, even discounting rapidly growing minority populations like Latinos and African-Americans, the European populace is
far from homogenous. Furthermore, much of the founding political culture of America was influenced just as strongly by the French Enlightenment as by the English, and let's not forget the original name of New York.
Mexico, meanwhile, defines itself as a hybrid nation between the Spanish and native Mesoamerican peoples, a "mestizo" nation which nowadays organizes it's society along racial lines in a manner reminscient of India's caste system. Would Mexico merely need Spanish, or would there be room for representing this cultural feature in a linguistic plan?
One other idea I've been kicking around is giving each Culture a designation; Major cultures (like the Progenitors and all of those currently represented as civs in their own right) would be capable of being adopted as the main culture of your civ, with interface/leaderhead/cosmetic changes et. al, while minor cultures (Ainu, Aka, Armenian, Carib, Goth, Luba, Nepalese, Turkmen and Uighur come to mind as examples) could only be incorporated as auxiliary cultures within a larger parent culture. Trick would be in deciding who gets major status, as there are some definite borderline cases among the mix (Basque, Berber and Welsh come to mind).