There weren't cars or guns or television sets in Elizabethan England or Renaissance Italy, but Luhrmann's "Romeo + Juliet" has all those things.
For better or for worse it's commonplace now to produce Shakespeare in anything but the dress of his own period or the times he wrote about. There's nothing wrong in principle about resetting an adaptation in a different era than the original work.
The film could be a real turkey (knowing Baz's work, that's to be expected), but a straight recreation of the 1920s probably would have been a a yawn-fest, especially since the 1974 film tried to do just that, and largely succeeded.
The funny thing, though ...
... is that what survived of the actual lost 1926 film doesn't look much like the stereotypical 1920s.