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Apparently you're going to have to install it in order to get the full experience. Doesn't this kinda screw people over who have the 4GB HDDs or what? Still awesome that you won't have to switch disks.
I'm not saying all are (or maybe even the majority) but to me it seems the 4gb system is an impulse buy for the average family using it as a media set top box and stuff like that and again it would seem to me that they aren't the main target for GTA V.