This patch fixes graphical corruption having to do with the polygons in the game being all out of place. From Rockstar Games:
This fix is an UN-SUPPORTED update that corrects polygon corruption that has been noticed on certain video cards and PC combinations. This is the only change that has been made from your original version of Grand Theft Auto: Vice City. Users who DO NOT have this corruption NEED NOT apply this patch. The only file changed by this patch is GTA-VC.EXE which is upgraded to version 1.1. Save game and setting files are carried forward with no issues.