phrequencyviii: Gundato already said most of my reply already, and did it pretty well.
I'll just add to his answer in regards to the FPS loss that occurred with GFWL running without the xlive mod.
We tested GTA4 on his beastly laptop, with only GFWL and ati tray tools running in the background. The latest patch was also applied and we ran on windows xp professional sp2. We used ati tools as it takes up less resources then fraps, therefore we can see how many FPS he could get, we could've got another 1-2fps without ati tray tools running, but there wasn't a difference when it ran without it.. With the settings that ran best on his computer, we got 25-35fps, 25 with a lot of explosions on screen and 35 when driving.
We then booted up his second win xp professional, same as his other one, but this time we installed GTA4 and applied the xlive mod, and then removed shitty GFWL. Again we tested with ati tools, and got 27-40fps. As you can see, we got a 5fps boost in 'normal' gameplay, and a 2fps boost in 'intensive' gameplay, e.g multiple explosions etc. GFWL is indeed a unnecessary background task that does nothing to enhance gameplay, if you are not into achievements.
In the two setups we tested in, internet was disabled, anti virus and spyware was disabled as there was no need for them with no internet on, and gamebooster was enabled in order to disable to processes you can't disable easily, and make the terribly optimized game run better. Even in a offline state, GFWL is awful!
We never run a game with anti-virus, spyware, net and gamebooster (optional) on unless it's multiplayer, or steam is needed to run it.
'In the era of 4GB and up of RAM I think most people will live with a few things open.'
The problem with GTA4 is even with 4gb 800mhz ddr2 RAM, a few things open can impact the gameplay, and the FPS count.
To add, 25fps with GTA4 is not good, there is noticeable lag and it can cause problems with aiming as the cross-hair will move slower then you move the mouse.