As well as this interview, Eurogamer also posted an article on the possibilty of San Andreas Stories. The article basically pulls some quotes from the aforementioned interview and puts them into perspective. Again they emphasise Rockstar Leeds' semmingly unprecedented skill at compressing data, and the advances in technology making it possible.
What do you think about the possibility of San Andreas Stories on the PSP? Bear in mind the game will likely be cut down from San Andreas anyway, but with these compression capabilities, maybe it might not be so cut down as we think? Discuss in our forums.
They've been able to "double the city size capable of fitting on a UMD," apparently. "At that rate we'll be able to go bigger the more we know and the more the technology moves on." In other words, don't rule it out.