I run it on XP Pro with an Asus P4T-E and an i850 chipset with 1 gig RIMM. Asus 8460 Ultra 128mb graphics card, Audigy Platinum round it out.
I play it on 1600x1200x32 without problems.
There is NO problems running it in XP. Anyone who says otherwise doesn't have it configured properly, and doesn't have the patch. Get the XP patch info on GTA3's website.