The current MSG was most certainly not built in the 30s. The original Penn Station was torn down in the 1960s. A Newark Arena will attract more people from Central NJ because they will be able to take a train right to the arena. If you don't think this is a big deal take the train with me to or from a Devils/Rangers game at Penn Station Arena.
in fact, wasnt the original MSG on the East Side of the island?
MSG is an ideal place for an arena. I routinely go to Devils/Rangers games via train from Hamilton. It's easier for me to get there than it is to get to the CAA.
Newark is an ideal location. I'm not sure how many people would take NJ Transit to a game in Newark, but if the arena were within walking distance of the station, I'd do it. There would however, have to be many other infrastructure upgraeds in the area though and there probably would be. cafes, bars, restaurants etc. it's a good idea anyway you look at it in my opinion