They were especially doing that back then to avoid having to pay for a patent license for the MP3 codec. You could only play mp3s in the user playlist channel if the OS supplied the mp3 codec.
Another reason many games use Ogg Vorbis is for seamless looping and zero delay sound effects. Gapless MP3 is a bit of a mess because encoders insert priming samples but there is no standard way to signal it in the bitstream. (it also compresses better than MP3)
Tough call to make. Microsoft somehow decided very close to the release to not market win2k to consumers, which was initially planned. Instead that inexplicable abomination called Me was cobbled together as a stop-gap solution, and a decision was made to add more polish and "fun stuff" to 2k and release it as xp.
Win2k was in fact already very suited for home users just from a technical standpoint. DOS compatibility was obviously lacking and indeed slightly improved for xp, but even that didn't run a lot of games. But it ran pretty much every win9x game I threw at it.
Allright, so I looked into it and found that while GTA3 did have an mp3 codec, GTA San Andreas did not and could not play mp3s unless you installed the codec yourself, which was easily done by downloading Windows Media Player.
I’m sure you can look up yourself what the consumer Windows was when that game came out, but clearly it did not come with an mp3 codec by default and the game definitely didn’t.