Why I think it WON'T be London
London is not an island, Rockstar made SA, VC and LC all islands and that was fair enough, but London is surrounded by other cities and countryside, only way to make it realistic would be to have the entire UK. No one (I hope) wants invisible walls at the end of roads.
It wouldn't feel right to play on an island which infrastructure mimics London, or also for the game to be entitled Grand Theft Auto IV: London.
I believe it will be a totally new and original (made up) location, perhaps based in parts on London, or other places, but it will not be London.
No invisible walls please.