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Just curious, is the release of PSCD instead of PS2, or is that prequel, sequel, or taking place in some other part of the galaxy?

It's a prequel, both the main characters (Alex and Diana) surname is Nelson... so in theory, John Nelson (who you'll remember from PS1) could have been the son of either Alex or Diana. It's never explicitly said in the game, to avoid confusion/mess in PS2 indeed.

This also takes into account the lore established in PS1 that there was a mass deletion/purging of records, and intense secrecy which also makes John Nelson's deeds a little suspect.