Not all of the sex scenes in hot coffee feature fully clothed women.  In fact, they generally feature nearly or fully naked women.  It is essentially like a cartoon version of late-night Cinemax.  No penetration.
That said, I agree that changing the rating from what is supposed to be the equivalent of R to the equivalent of X or at least NC-17, over Hot Coffee is absurd.  It was political pressure, pure and simple.  Hot Coffee is the least of Grand Theft Auto's inappropriate content.
I beat the game about a week ago, btw.  I consider it one of the greatest games in the history of gaming.