GameSpy has interviewed Hannes Seifert, managing director of Rockstar Vienna, about GTA3 and GTA:Vice City for the Xbox. He was the producer of both projects. It contains information on what exactly was improved.
Slashdot linked to the interview, and, as usual, many comments were added.
The most interesting comments (for me) were by a tester at Rockstar New York, who worked on both games. He has very nice things to say. For what it’s worth: the issues in the control scheme in Vice City got ironed out. The controls were much more complicated than in GTA3.