Hey I am playing Manchester City as well. One advise I think you should consider is not buying or selling players so often. The team performs way better when the players have been playing together for a year or so.
Here's my first team squad:
Goalkeepers: Joe Hart, French Regen
Defenders: Micah Richards, Sebastian Corchia, Dennis Diekmeier (Loan)(DR)
Gael Clichy, Italian Regen (DL)
Vincent Kompany, Dedryck Boyata, Mamadou Sakho, Sebastian Toro (DC)
Midfielders: Nigel De Jong, Javier Mascherano (DM/MC)
Frank Lampard, James Milner (MC), Shaun Wright-Phillips (I bought him just because he is a Man City favourite, buying players like him or robinho really adds to team and fan confidence)
Vladimir Weiss, Adam Johnson, David Silva, Samir Nasri (AMR/AML)
Ganso (AMC), Though Silva, Nasri and Aguero all are adept at playing AMC
Forwards: Sergio Aguero, Edin Dezeko, Leandro Damiao (True gold 62 Apperances/ 7 Subs, 64 goals!!!, careful though I know from previous games he is injury prone, so not very rigorous training schedule, easy tackling, stand off more in matches, this game only got injured once for 7 weeks)
Try buying young players around 16-18, and train them so that you can have good home-grown players by 21. Look for young players in Empoli, RC Lens, Aj Auxerre, Stade Rennais FC, Roma, Cruz Arul, Velez. Ask your board to upgrade youth facilities, always use the fear of opposition gaining advantage or something.
Hope this helps :D, Good story btw