I blame the media. Totally misquoted Rockstar and ran with it - they never claimed it wasn't in the game, but that it wasn't accessible. What the modder had to do was decompile the software, which is not only a Bad Thing but utterly removes any liability held by Rockstar. All that's unlocked is some scripting, an indoor set and animations. Nudity wasn't included, that's been created by other third parties, the 'sex' that's there normally is fully clothed. Much, much less obscene than in other 'T' games, say, The Sims.
Code-wise, all that'd be in there would be camera controls and references to various animations. Rockstar didn't do anything terribly evil by leaving it in there.
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"'There's a tendency among the press to attribute the creation of a game to a single person,' says Warren Spector, creator of Thief and Deus Ex."
-- From an IGN game review.
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