If most GTA2/3 owners bought at $150, are they going to stretch to ~$300 for GTA4? My guess is no ...
My guess is that you'll be able to buy a $199 console that is GTA4-ready on the day that GTA4 releases, so it will not be much of a stretch for those people.
Yes, the $199 console probably won't be able to download the episodic content, until the owner buys a storage add-on. But the crowd we are talking about was already accustomed to paying for storage add-ons (i.e. PS2 memory cards).