This new trailer addresses my concerns with Art Director Adam Diller discussing why the game really is Steampunk. He does admit that Damnation creators had to do a bit of tailoring to the genre to get it to fit the game (which is why there are no frilly Victorian dresses). But they gain Steampunk street cred by sticking in what looks like a zeppelin.
Just so we're all on the same page about what Steampunk is supposed to be, let's use this checklist ganked from the blog of an author whom I've never heard of and see how Damnation stacks up:
Steam-powered machines — Check
Goggles — If by "goggles" you mean "cowboy hats," check
A resident tinkerer/mad scientist — Check
Totalitarian authority to be overthrown or otherwise subverted — Check
Victorian sensibilities — Fail; just look at that chick's outfit... it's not even sensible, let alone Victorian.