"State" can be used to mean (more or less) either "country" or "province", I believe.
From Dictionary.com:
7.a politically unified people occupying a definite territory; nation.8.the territory, or one of the territories, of a government.9.(sometimes initial capital letter) any of the bodies politic which together make up a federal union, as in the United States of America.
Wikipedia goes into more detail here.
(Use of the term "state" can be seen in the name of the game NationStates (TV Tropes link), for example.)
As to "iso", to my mind that feels somewhat technical--it brings to mind thoughts of measures and standards.
As a suggestion, what about "Citizen of the State"?
SimStates are available but not sure if its a good name (not sounding as good as SimNations etc imo) , also SimuCitizen (Sim-U-Citizen ?) is available but something doesn't fit in :/
btw, seems iso isn't a good idea as you mentioned.
And for suggestion, thanks but I try to avoid words like "the" whenever applicable , only if it will lead to a good domain (TheSimCitizen ? :P )