A Dreamcast disc can hold
up to 1GB of data, slightly bigger than a CD-ROM of 650 MB. GTA3 on the PS2 was released on a DVD-ROM, which can hold up to 4.7 GB. Even so, I don't notice any compression with assets/textures. I think GTA 3 on PC requires a
minimum of 500 MB of free space, so this shows how talented that team is with compression and optimization.
It actually is possible. Example: Pirated releases that were made to fit on a CD so bootleggers could spend less money creating copies, and to make it easier to download.
All they did was remove all the duplicate and dummy files that help make it faster to stream in data since the drive doesn't have to spin up as much (and also protect the disc from scratches).
Still wasn't enough, so a few radio stations were cut. However if Rockstar were to make the game for Dreamcast, it would be possible since it would be under 1gb even without radio cuts.
III on PC requires the disc in it to stream audio from, which is why it's split into 2 discs, the 500mb install disc with the game data, and the 200mb play disc that contains audio. So i don't really consider this insane optimization, it's just splitting the discs into two requiring you to stream from one. I assume they did some compression with game data however.
Then again, the guys porting to DC targeting ODEs and burned CDs, so they have to get it under the 700mb limit. That's pretty commendable since neither the PC port or the pirated release got away with it without any issues compared with the full PS2 version. They also REALLY have to optimize if someone is using a CD, since DC has half the RAM of PS2, so that requires more reading from disc.
Edit: Nevermind, they're not targeting CDs, they're targeting the size of the GDROM. Understandable, since 1. The GDROM reads at 12x speed compared to the PS2s 4x for DVDs, and Dreamcast's 4x for CDs. 2. It'd genuinely be a miracle if they got it on a CD, on Dreamcast, without ANY issues. Guess that's how they can get away with half the RAM. Still requires more optimisation for streaming.
So, they're targeting under 1gb, which is possible even on the original PS2 release, and of course on PC.
As for VC... removing all duplicates and padding would result in the game being 2gb in size for the PS2 release. The PC port requires 2 discs, each having 600mb. 1 for data to install (heavily compressed, decompressed and installed to hdd it's 1gb.... but i may be wrong on that. been a while since i've installed the original CD release) and 1 to play and stream audio. So I don't think it could be on Dreamcast unless some insane compression tricks were used. I mean, you could remove the opening intros (14 and 37mb for NTSC and PAL versions both on the same disc) but that wouldn't amount to much. Or, give up and use multiple discs.
Source:
This video is about VC, but he brings up III as well.