In The Great Gatsby, is there a relationship between where the characters live and what kind of people they are?
Yes, there is. Tom and Daisy Buchanan live in East Egg. East Egg is the wealthiest setting in the novel and symbolizes the highest level of upper-class American society. The people of East Egg have inherited their money over many generations. They have always lived with great wealth and privilege. As a result, they have become self-centered and corrupt. Fitzgerald calls them careless, destructive people.
Gatsby lives in West Egg, also a wealthy enclave, but not in the same way as East Egg. West Egg is populated by people who have earned their money, sometimes in illegal or "tacky" ways (at least in East Egg estimation). People in West Egg flaunt their money and lack polish. Gatsby has grown rich because he is a criminal, he clearly lacks social polish, and he displays his wealth in every way possible.
Nick lives in West Egg, but he lives there as an outsider. He rents a small cottage. Nick is in West Egg, but he is not of West Egg. Nick belongs to the moral Midwest where he eventually returns. Nick leaves the East because he cannot tolerate the amorality he finds there.
George and Myrtle Wilson live in the Valley of the Ashes, a poor industrial area between East Egg and New York City. George and Myrtle are members of the poor working class. The ugliness of the area where they live mirrors the drabness of their lives. George is honest and hard working, but he can't get ahead. Myrtle is restless and dissatisfied. Her affair with Tom is an attempt to escape her surroundings.