The Conversion
For the PSP release, RockStar will have to convert their gaming engine (probably a version similar to the III/Vice engine) to the portable console, whilst still being able to store the large 3D city on the UMD.
As shown above there is a very large difference between the output resoloution of the PS2 and PSP, therefore RockStar will be aided by being able to downgrade their graphics engine reduicng both object size, texture size and the graphics module size.
Also you'll almost certainly have noticed, the PSP has less controls than the PS2 or Xbox. Namely the fact that there isn't second shoulder buttons or the second (right) analog stick. However it's not hard to see how Rockstar will probably get past this problem. The image above shows what we think the controls will be on the psp.