Rockstar Games just confirmed that they have released a patch for the Playstation 3 version of GTA IV which was causing issues with online play.

Rockstar Games has released a GTA IV patch for Playstation 3 today that prevents Gamespy?s servers from being overloaded and therefore reduces the impact on those servers that were causing the game to stutter and lock up. We continue to monitor the performance of the game both on and offline and will provide further updates as necessary. We want to assure everyone that, together with our hardware partners, we continue to strive to give our fans the best possible interactive entertainment experiences possible. This update will ensure that everyone will experience Grand Theft Auto IV the way it was intended. We apologize for the inconvenience this has caused.

Looks like Microsoft's prep work for the game mostly paid off.