Well, I'm not really sure that 4GB is a must for Vista, but then again, I always had 4GB so I can't tell how the game would work with only 2GB.. I presume it would load things slower and write them into memory, but hey, that's not your problem now. I had this same problem because of the drivers on my gfx card. What you should do is search for compatible drivers with GTAIV, that means search for drivers that are universal for ATI cards and promise an increase in the performance of GTAIV. How much video ram does your ATI card have? And last, but not least, maybe you should think about overclocking your procesor to about 3.2-3.4GHz (I'm not even sure what the potential of an AMD is anymore, but Intel's are overclockable to about 50%).
As for patches, I'm not sure how much it could solve things as the last time I played GTAIV was on medium with patch 184.108.40.206. Try installing the newest one! You don't have anything to lose anyway. A long story short, this is what you should try:
- updating your ram to 4GB (buy some cheap, but good ram)
- searching for universal GTAIV drivers for ATI
- overclocking your gfx card
- overclocking your procesor
- updating the game version (patching)
And no, I don't suggest you degrade to XP, although I still use it. You should make a dual-boot, though! I have Win XP-Win 7 dual-booting system if a game refuses to work as good on Win XP as it would on Win 7. Also, I suggested overclocking, but you should inform yourself good before trying it. I overclocked my Intel from 2x2.2GHz to 2x3.6GHz and it's great. It doesn't overheat or anything. Also, while playing Prototype (the last game I played), I played with the clocks on my gfx card through RivaTuner (recommended for Nvidia cards) and had to make a vent system so it would never go over 75 degrees Celsius. It's a risky business, so I would recommend you try the simple things first which involve the upper mentioned software help.
Btw, sorry for the long post, but I hope all this will help ya!