Without friction how are the cars and people moving in the first place? You would not be able to walk without friction! You could slide, but... walking is another subject.
I can clear up this confusion. You see, GTA4 is a video game. The things shown are not actually real. Feet have friction still, motorcycles are immune and moving vehicles spawn and despawn depending on your proximity to them Now stop being a downer! The vid has explosions and blood!