Since the game takes place in 1911, it may not have been as widespread at the time as the Colt 1908... which pretty much looks and fires like a 1911 anyway.
I dunno. Personally, it'd be easier to accept a couple months worth of anachronism than a .32 being the most powerful pistol in the west. It would have fit better too, with most of the game a glaring homage to films like The Wild Bunch and The Professionals.
That's the problem with that gun yeah, it acts more like 1911 and only looks like 1908. Maybe we should go and bother Rockstar and they'll add a real 1911