NL West/AL West
Los Angeles Dodgers/Los Angeles Angels
Arizona/Colorado (from NL West)
New York Mets/New York Yankees
NL North/AL North
Chicago Cubs/Chicago White Sox
St. Louis/Kansas City
NL South/AL South
Teams play their division rivals 14 times each (3 x 14 = 42)
Teams play other teams in the same league 8 times each (12 x 8 = 96)
Teams play opponents in the same division in the other league 6 times each (4 x 6 = 24)
As much as I'd like to see MLB in Louisville, Indianapolis would be more realistic.
I think this is near perfect. The only thing I would say is that there should be a new team out west (but I may be biased being from California). There are just so many teams out east already and most people that call for expansion want more out east. I definitely think we need to add one in the Southeast (just look at the CWS, they like their baseball in the Carolinas). So I definitely favor Charlotte expansion.
I do however think that Cincinnati should stay with the Cubs and Cardinals in the North and Baltimore also has a long history with the Yankees (in fact the Yankees are the original Orioles). Moving Arizona or Colorado to the AL West and making them rivals makes sense (though I move Arizona because they are the newest team, but that really doesn't matter).
I would favor a team in Portland to be matched up with Seattle. Then SD would be matched up with a much more regional rival in Arizona. The only downside to this is if a team is put in Portland and Charlotte, that leaves Colorado to be matched up with Detroit. Not great, but it could be worse.
As for scheduling. Right now teams play 18 division games, usually against 4 opponents. That's 72 games. I would keep it at 72 games (24 vs each team, 12 home, 12 away). Teams then play the other teams in their league anywhere from 6-10 times per year (the NL probably averages 7 with 16 teams). I would make it simply 6 games, 3 at home, 3 away vs every other team in the league). That's 72 games (144 total). That leaves 18 interleague games (which is what the AL has now, while most NL teams only get 15). You could play one division on a rotating basis (12 games) and your rival twice (6 games). Now this would mean every 4 years you play your rival 9 times because you're playing your rival's division but I look at that as a good thing.
As for playoffs you have 4 division winners and 1 wild card team (none of this 6 team stuff, I hate going to 5 as it is). Worst division winner in a best of 3 vs the wild card team.
As you can probably tell, I am a huge fan of divisions and hate the idea of eliminating them. The last month of the year playing all your division rivals is the best time of the year for me. You do this and you have 8 races for a division crown and 2 for wild cards. You could have as many as 18 teams still with realistic playoff chances in the final month.