im sure all of this stuff has been mentioned before...
gta3's engine is more limited than VC's, and thus cannot support as many vehicles. if you put in too many, you'll strain the engine and get effects like multi-colored skies, colorless cars, etc... MTA:GTA3 0.4.1 suffers from this problem.
the problem with having all of the islands open at once is that they dont know of an orderly way for players to transfer from one island to another. plus, given the limited number of cars the GTA3 engine can hold, the cars would have to be stretched extremely thin accross the 3 islands.
EDIT: opps he beat me to it by 7 minutes. damn i type slow .