Thats not quite right. GT4, and any progressive scan videogame and DVD runs in the same frames-per-second whether its interlaced non-hdtv (ie 480i), or progressive scan (480p, 720p), or high def (1080i). GT4 runs at 60fps NTSC and 50fps PAL. When in progressive scan it is showing both of the fields at once instead of one at a time like in interlaced images, so you'll get a much smoother image. But the framerate is the same - it just looks smoother, cleaner, and sharper in 480p.
The difference between 480i and 480p isn't night and day, but it is nice. I recently played through US NTSC Metroid Prime 2 in 480p and it looks great. 1080i will look awesome though because of the resolution, but in fact 720p does generally look better (as its a progressive, much smoother, image) even with a slightly lower (but still very high resolution).
I'd imagine 480p would be the maximum you'll want to play GT4 in (if it in fact 1080i if for racing, not just menus), because running a PlayStation2 game at 1080 resolution will be an incredible hit on the hardware, and I would think a lot of effects and track detail will have to be removed to get in running in a frame.