GTA IV is a buggy nightmare when it comes to system requirements when it first came out. I truely love the GTA series... but GTA 4 is well infected by Microsoft! It's the only one that is bugged, doesn't work the first time you install it from DVD, and requires a lot of patching (after it's already been released). It also forces you to install 'Gamers for Windows' and some other side applications.
I suggest you need a 2.4GHz Duo Core Processor or more, it's not really processor hungry except the loading.
Your'll need at least 2GB RAM, 4GB recommended.
However, what really bugs this game or gets it to run smoothly is the graphics card and video card memory!
I had a 8800GTX - run like a dog, freeze, lagging, ripping, auto-locked the graphics all on low. I uninstalled the game, nothing would improve it even tweaking... read some of the troubleshooting forums around for bugs in this game, it's useless... I got an error during install, solution return the DVD to store, re-install 3 times, suddenly works. Got this Graphic card error blah, solution downgrade graphic card driver. Got lag and ripping, solution ...
I got a Nvidia 275GTX 896MB later on, tried the game, it was totally different. Runs smoothly, max the graphics, no graphic ripping or lag. It was seriously like playing a different game. Still had a few bugs like issues can't go bowling, etc, but they released patch updates for those.
Bottom line: It's a graphic card memory hog. The graphic card will cost you a good chunk. Stick to the older 'real' games of the series if you don't. They released this too early, not the same programmers and messed it up working with MS.