I joined the company (then dma-design) in 1995. I worked on a game called 'Space Station Silicon Valley' (SV) for the Nintendo 64. At the time we worked in a larger open office that housed 4 teams. SV, Tanktics, the test department and Gta. The company was very open, there was even a thing called Friday afternoon R&D where you were encouraged to talk to other teams to cross pollinate ideas.
So I was able to follow the development of gta1&2 fairly closely.
By the time I got there, the game had already gone through a number of changes. The game originally started from a tech demo made by Mike Dailly. It was a top down view with 3d buildings on top. This was before 3D cards and it was hard to get 3D to run at a decent frame rate. Mike's demo used code similar to Doom to draw the 3D effect. The downside of this code was that the camera could not tilt. The upside was that the game ran on a pc without hardware acceleration at a good frame rate.
The team took this engine and developed the game around it. Initially it was a racing game called 'Race n Chase'. Then they changed it to a pizza delivery theme. After this they turned the player into a cop. Then they settled on the idea of the player being a criminal. All of these changes had already happened by the time I got there.
The team at dma-design wrote the game on PC. The PlayStation version was handled by an external company called Visual Science, ran by Russel Kay. Russel Kay had been one of the original developers on Lemmings but left dma-design to set up Visual Science.
The PC has loads more memory (32M in those days) than a PlayStation (2M). The PC has a faster processor and more graphics memory. As a result the game had to be cut down to fit on the PS. Whenever the team at dma-design saw a new PlayStation version they were always disappointed.
The PC version would use 256 colours for the textures. I remember one particular time when all of the textures for the PS version had been cut down to 16 colours. When the artists saw the results there was cursing. There was no choice though. Difficult choices had to be made to get the game to run on a PS.
I think the PS version didn't have trains (this was because of time constrains) and a level had to be cut. I could be wrong on this.
Gta never looked like it was going to be as successful as it was. There were higher hopes for 'Body Harvest' and other games. In fact, initially the game didn't sell that well. It was only after some controversy around the violent nature of the game arose that sales picked up.
Allegedly, there had been a meeting at the publisher (BMG-Interactive) to decide whether it was even worth releasing the game at all. This was just months prior to the actual release.
Gta was successful because of its wildly innovative gameplay, the living breathing world and the controversy. The team started on gta2 immediately. (Fun fact; the game was called GBH until a deal with the publisher was finalized)
Gta had been a little rushed and the team were keen to fix more bugs and add more polish. Especially the lighting system needed improvement. The lighting in gta2 looks a lot nicer. Gta2 was set in the near future which required a lot of changes particularly with weapons.
The team also introduced a whole new respect system. The development of gta2 took 2 years and the game came out in 1999.
Although Gta2 is much more solid and better looking than the original, it didn't really deliver in terms of sales.
The Gta team had loads of outspoken characters on it. Most teams were quietly getting on with stuff but this wasn't the way at gta. There were arguments and tempers would flare at times. Maybe colourful people were what was needed to think it was a good idea to make the player a criminal.