According to Computer and Videogame's first magazine publication in 3 years, the downloadable content for Grand Theft Auto IV will be bigger than just new cars, new models, etc.

 "Of course, to call games as vastly ambitious as Vice City or San Andreas mere 'expansion packs' seems childish, but nevertheless, the downloadable content (DLC) coming for the Xbox 360 version of IV has repositioned those games in just this way. DLC so far has meant the odd new car, jumper of bit of horse armour, but GTA IV is set to completely redefine the idea with expansions that are to GTA IV what Vice City or San Andreas were GTA III. Yes, Rockstar is clearly hinting at new downloadable cities; and the chances of them being London, Vice City or SA again are slim to none. So that's new as in brand new. GTA IV's Liberty City is the beginning. Think about that and be excited."

Even though this is still just a rumor and Rockstar hasn't confirmed new cities as DLC, it would make sense. I mean come on, it was good enough for Microsoft to pay up $50 million. However on the other hand, it takes a lot of resources to make new cities, such as artists, designers, programmers, play testers, etc. New cities are possible, but very hard to do especially if it's going to be DLC.

Source: Gamervision