You have to keep in mind that SA already maxed out a DVD's data capacity, and seeing as they were limited to keeping GTAIV on a DVD rather than Blu-ray, it was obviously going to mean a loss in the amount of gameplay in favor of better physics and graphics.
Granted, they could have made it bigger by releasing the 360 version with multiple discs, but in a non-linear game like GTAIV, pausing the game to swap out discs every few minutes is not likely going to go over well with gamers.
Until the 360 comes out with a Blu-ray drive that supports games, or allow those 360 owners with large enough drives to install games onto their HDD using multiple install discs, developers will have to be forced to either limit the size of their games for multi-platform releases, release different versions for the 360 and the PS3, or just release them for the PS3.
Prior to the release of the 360 developers were already maxing out DVD 's capacity and currently there are already several games for the PS3 that far exceed DVD capacity, so this isn't a future issue, it's happening right now.
I'm guessing Microsoft had hoped their digital distribution model would be up and running by now and that 360 owners would be able to simply download the games that exceed DVD capacity... the problem is even if it were, of the 20+ million 360's out there I suspect the vast majority of them have only a 20GB HDD, and probably a large margin have no HDD at all. Basically MS is in a tough spot right now in terms of future big title releases.