It will run dude,
And more importantly, you don't need to upgrade to SP2, just do the following.
Hit 'Start' then 'Run'
Then type in 'regedit'
Go to HKEY_LOCAL_MACHINE, then SYSTEM, then CurrentControlSet, then windows
From here on in click "CSDVersion" and click modify, change "0x00000200" (SP2) to "0x00000300" by typing 300 in the field where 200 once was.
Close it down,
Restart (MAKE SURE YOU RESTART)
And bam, your on your way to play GTA, I recommend with your graphics card to put all graphics down. The game will still be wicked looking.
Have fun,
Keep in mind that GTA4 is buggy as shit, it keeps freezing, even on better graphics cards, so keep your drivers updated.
Laters,
Pasha.