Do you think that he's trolling though? I just found it amusing. I'm not sure if they reduced the people and cars using photoshop, or it's really genuinely just a few cars and people in that scene.
But if you reduce the cars and NPCs, then it wouldn't feel like a real city though. Sure, you can play it, but the immersion would definitely be broken with this little life into a game. I think graphics makes realism, and all the non-essential objects like the driving cars and random people really make the city a lot more real, as it gives a breath of life to an otherwise empty and dull city.
I do feel GTA is one of those games that compression hits a huge part of the gameplay appeal.. it just doesn't feel the same when the city is torn into low quality polygons and cars that feel like boxes with wheels. I guess if you really need a fix and you're heading somewhere with an incredibly crappy connection I would go for it.