According to the Wikipedia article on GCR, the Commodore 1541 disk drive used a particularly efficient GCR encoding scheme to cram 170K onto the same 5.25" disks that in an Apple drive only stored 140K.
However, for the Amiga 3.5" disks, they reverted to MFM, a lower density encoding. Why abandon something that worked so well?
[GCR] would appear to let a disk hold far more information than could be stored under most other methods. However, since GCR permits the use of as many as eight on-bits in a row, the drive cannot interpret them at full speed. It is necessary to write or read at only half the normal speed, in order to insure accuracy. When the writing speed is slowed to four microseconds per bit instead of the normal two, the density of the data is only half as much, cutting drastically into the storage advantage.
That would indeed seem to eliminate the advantage of GCR. but then why did that disadvantage not apply to its use for 5.25" disks? Is it a limitation of the rate at which the electronics can process the bits, or of the physics of the interaction of the drive head with the magnetic fields?