Alcatraz is a prison that, in the beta, was located on an island off of the north coast of San Fierro, next to the Gant Bridge. It was taken out of the game before release and replaced with a small island next to the large cargo ship owned by the Da Nang Boys.
Alcatraz Island is a real-life island that contains a large prison and a lighthouse. It was abandoned in 1963, and it is currently a Historical Landmark. The Island is located in the San Francisco Bay, 1.5 miles offshore from San Francisco.
In Grand Theft Auto: San Andreas, an island similar to Alcatraz Island was going to appear. It was present in the beta version of GTA San Andreas, but it was removed from the final game for unknown reasons. This can be clearly seen in the Beta Map of GTA San Andreas. In this map, a small island can be seen just north of the San Fierro Peninsula, just east of the Gant Bridge. This would have been the Alcatraz Island in the beta version. The Beta Map can be found inside Mike Toreno's Ranch, as well as inside the Lil' Probe Inn.
The real-life Alcatraz is rumored to be haunted. Many infamous criminals, including Al Capone and Robert Franklin Stroud, were housed and even executed in the prison. It is believed that, if the prison existed in the final version of GTA San Andreas, it would harbor many myths.
In the mission Interdiction, when Sweet is arrested and imprisoned, Mike Toreno tells Carl that Sweet is "Doing some time upstate." There are no prisons in San Fierro or Las Venturas, and this is the only logical place where the prison would have been located. It is possible that the mission was written while Alcatraz was still present in the game, but after its removal, game developers felt it was unnecessary to change the game's dialogue or they forgot it. This mission was most likely the reason why Alcatraz rumors began to circulate. The actual location of the prison in which Sweet is incarcerated remains ambiguous.
There are mods available which place an Alcatraz Island in the middle of San Fierro Bay.