The trailer for Grand Theft Auto 5 is live (you can watch it on pretty much any site. 1up, Game Trailers, etc.). The game was rumored to take place in L.A. this time around, and the rumors seem to be true. There's no way to tell if you are going to be in L.A. the entire game, but it certainly seems to be a large part of the game.
It's not exactly in L.A. Per se. In true Grand Theft Auto style, They renamed the city and some of the cities around it (The Hollywood sign says Vinewood instead). However, the skyline is still very similar. You can still see the U.S. Bank building and a few other recognizable structures. Even a freeway or two seems to have kept its original name. The trailer shows a sign for the I-5 on the road.
The story so far seems pretty basic, but its still way to early to start guessing plot points. The trailer features dialogue suggesting that our main man moved to the city to escape his life of crime, never to return again. I'm sure it'll work out swimmingly!
Truthfully, I can't wait. I had a nerdgasm when i was able to cruise around a town I knew in L.A. Noire, I look forward to doing the same in today's version of the city. Again, there's no way to tell how accurate the city will be, but it still tugged on a heart string or two to see my city represented as accurately as i could see from the trailer.