Why would it be good?
Oh come on! GTA already has a free-form mission structure, a hugely explorable open-world environment and some brilliantly anarchic multiplayer. Let's take all of that and go massive!
How would it work?
GTA-style versions of around ten major US cities would be spread over the servers. Liberty City, San Andreas and Vice City would naturally be included and players could create either a criminal or police enforcement character. The main focus of the game would follow the model of the offline titles with PvE missions progressing your character's career path, but the MMO nature of the game would allow the creation of gangs or SWAT teams for co-op missions. EXP and money earned would provide access to higher-level weaponry and vehicles, and cash could also be used to trick out your safe house or police station, depending on which character faction you chose to use.
Above: Now imagine if every one of these people was a real, live player...
As the game progressed, your choice of branching story missions would eventually lead to the option of joining one of your city's major crime syndicates or police divisions, in turn leading to new selections of specific high-level missions and even alliances with players in other crime families or police divisions on huge, joint-operation heists or raids.
It would be possible for criminals to defect to different gangs, or even cities, but there would be a pay-off through the need to stump up bribes in order to stay alive, as well as a drop in character status after the move. Cops would be able to put in for transfer, but would recieve a drop in rank afterwards.
And then of course there would be the PvP servers, which would host parallel versions of all of the game's cities set up for cops vs. criminals raids, large-scale variations on GTA IV's multiplayer modes, and of course that lovely, lovely free-for-all GTA carnage. Sound fun? Of course it does.
Will it ever happen?
It's very, very likely. Rockstar boss Sam Houser has professed a love for the idea several times lately, and GTA IV's sizable multiplayer component and upcoming DLC for the 360 could well be interpretated as Rockstar's first steps towards a persistent GTA world. The similar sounding APB from Realtime Worlds could steal some of GTA's online thunder, but the strength of the brand would be certain to pull in the players regardless.