An increased Hct can occur either due to a decrease in plasma volume (dehydration) or an increase in red cell mass (polycythaemia)
Primary polycythaemia is a bone marrow disorder caused by a gene (Jak-2)becoming constantly switched on within the immature red cells. This causes them to grow out of control. It is not usually a genetic disease in the sense that it is passed on to other family members and it tends to be more common in older people. I would say that in general patients with uncontrolled primary polycythaemia would feel pretty rough and there is a risk of transformation to acute leukaemia. Haven't seen many cases in 20-30 year olds though it is certainly possible and would be highly surprised if many professional cyclists had this.
Secondary polycythaemia can be caused by many things: smoking, high altitude (we're talking Andes/Himalayas here), lung diseases and certain tumours which release Epo esp tumours of the kidney and liver and the rare cerebellar haemangioblastoma! With regard to high altitude, this seeems to occur in people who stay at high altitude all the time.
Another possibility and the most intereseting case from a sporting perspective I've heard is that of a
Finnish cross country skiier called Eero Mantyranta (
http://en.wikipedia.org/wiki/Eero_Mäntyranta) who was a triple Olympic gold medallist and from a family that had a genetic defect of their Epo receptor gene. Over 200 of his family members were subsequently found to be positive. As folk have said the Epo receptor senses Epo & tells us when to make red cells. Without Epo stimulation it gets switched off and we stop making blood. Old Eero's family had a defective receptor that was constantly switched on, hence the high Hct. Ironically I think he was eventually done for another doping offence in the twilight of his career, as if he didn't have enough of an advantage already! Pockets of Epo receptor mutations do occur.
One big one is in the Chuvash Republic of central Russia.