Well, NO is the city at the mouth of the Mississippi River, and that is why it became a city. If you look at all of the major cities in the US, they are all based near a body of water. This is because water was, and still is to this day, one of the best ways to transport goods. Look at Boston, New York City, Seattle, San Francisco, Oakland, etc. They are all right on the coast and as a result are some of the more important cities we have.
NO is also a checkpoint for a lot of goods coming into the US. Any large cargo that has to go up the Mississippi river to any of the cities along it has to go through New Orleans. There are still many cargo loads that just can't be shipped any way except by boat.
As for why there are no big cities in Tornado Alley, that's really just a consequence of the terrain out there and not because of tornados. Again, water sources are the key aspect of a thriving city and there aren't too many major waterways in the middle of the plains. The only real big one is the Mississippi River and there are PLENTY of major cities right along it. Cities in the middle of Iowa, Nebraska, Oklahoma, Montana, etc. generally don't exist because there really aren't any reasons for them to be big cities. A big city develops when the terrain around it is useful, or there is a resource near there that makes it an attractive place to live. Most of the cities out in the southwest grew rapidly thanks to the discovery of gold and silver and the need for the mining industry.
To say that New Orleans doesn't need to exist is really not something that any of us here on this board can say. None of us are urban planners and playing SimCity doesn't count.
