Forget previous games, we're talking now about DmC.
They said that Mundus killed Dante's mother and imprisioned Sparda. That was a long time ago and we don't know what happened after that. The boys did grow up and took different ways.
So, Sparda may be alive or not, but I believe he is. The tricky thing is that he probably got out of his hell prision, probably assuming a disguise. He is weak and can't fight back. He can't even show himself, because Mundus forces are looking for him. That means he probably is kept hidden or he really wants to be kept that way...
So, that's where we have that Phineas guy. My theory is that he is Sparda using a disguise. He keeps giving instructions to Dante, about killing Mundus child and so on. Why a demon would help Dante?
So, once Dante gives back is face, Phineas will reveal himself as being Sparda, and Dante will absorb his powers to fight Mundus, just like in DMC 1. It's gonna be a epic battle, it has to be!