I think that a living, breathing world makes up for a good GTA location. The interaction with NPC's, the culture, the ambiance, the amount of detail, etc. One of the reasons why IV's rendition of Liberty City is felt more alive, and real than the other cities in the GTA universe. The 3D era had fun locations, but they are not as lively or as detailed as the cities in the HD era. The HD era provide a balance of making each city feel like the real thing, while making it fun, and viable worlds to explore in, while the 3D era cities are brilliant playgrounds to mess around with, but they don't really feel real, and alive in comparison to both Los Santos (V), and especially Liberty City (IV). Vice City was a brilliant location, especially due to the relevance of its time period. And the various inspirations from Scarface, and Miami Vice provide insight, and homage to the neon lighted, palm tree'd, pastel coloured world of Vice City. It is the best city in the 3D era, but I think that it did lack the many aspects of the HD era.
Liberty City (IV) in particular is a great GTA location because of how lively, and dynamic the world is. Each district, and boroughs have each distinct character within them. Hove Beach for example is a bustling area with Eastern European culture, while Beechwood City has a great number of Rastafarian culture. Also the way the NPC's interact with the player, and vice versa. A example is giving tramps, and beggars money, it's a small tiny detail, but it makes the city not just a a big, dull map with random people, but adds up to provide a more immersive experience.
Ambiance also make a city/town really helps to make a good GTA location. The ambiance in Liberty City (IV) is really good because of the game's representation of a replicated, condensed version of New York City with the charm, and self aware humor of the GTA series. The sounds of the city with sirens, and horns blaring, people reacting to the weather, random vehicular accidents, gang wars, the lighting that highlights various moods, the expansive public transport system, and more. Liberty City feels like a crowded, and large city that could believably can exist in the real world.
In hindsight, a world full of life, and atmosphere that compliments the city is what makes a good GTA location. However you need the right ingredients, but you need the recipe to properly work in order to make a detailed, and bustling world.
This picture shows Star Junction as a bustling,and crowded area in Liberty City. Also the rain, and the lights compliment the atmosphere,and ambiance.
Middle Park during the afternoon is perfectly described in this picture. A place of green, a place of recreation, and a place of distinction. Shows the city in a different mood.
The picture depicts interaction with NPC's. It shows Niko giving a beggar money late in the night. Look closely to the trash bins, you can see flies flying around it, and in-game you can hear them buzzing. Traffic at night is not as many as in the day. Proving that the world is very dynamic.
NPC's interacting with other NPC's. The picture shows that a hoodlum is getting arrested by a Police Officer at Outlook Park. The picture proves that the game can be dynamic too without the player's input.