There are alot of differing opinions on how to poperly adjust your gearing. My method involves setting the gearing to the car and adjusting it (if necessary) to the track.
Contrary to popular belief, a close ratio transmission is not necessarily better than a wide ratio transmission. Similarly, having 7 gears is not necessarily better than having 4.
The number and spacing of the gears is a compromise. Having more gears slightly increases your average power during a lap, but it forces you to shift more often during a lap. The act of shifting gears takes a finite amount of time. Depending on your collection of parts, it could take anywhere from .05 to .15 seconds. This may not sound like much, but after shifting your way around a road course, it adds up.
Luckily, this is one of the problems we can solve mathematically. Unfortunately, the game rarely allows us to implement the "perfect" solution, since it gives us a narrow window for each gear adjustment.
The car's acceleration in any individual gear at any RPM is a function of it's torque. The more torque you have, the faster you will go. Obviously, there is no reason to operate at an RPM below your torque peak (you wrote it down, remember?) during a lap. This sets the lower limit for your powerband.
The upper limit is a little more vague. Your torque is declining as the RPMs climb. At some point, you'd be better off in another gear. You're looking for the point where this occurs. Since the compromise is a function of torque and RPM, we would need a measure of torquexRPM. This turns out to be Hp. It would appear that shifting at the Hp peak is the ideal solution (in many cars it is) but since you lose some time during the shift, it's quicker to let it wind beyond the Hp peak. I wouldn't go any farther than 10%. This means that your upper limit is either just shy of the rev limiter or just above the Hp peak.
Now that we have both limits, we want to find the gears that will drop our RPMs from the upper limit to the lower limit during a shift. The first step is to divide the upper limit RPM by the lower limit RPM. This gives us the drop ratio. Now multiply this number by your first gear ratio. This gives you the ideal second gear ratio. Multiplying the drop ratio by the second gear yields the ideal third gear ratio, and so on.
The problem is that the game will most likely not allow you to set these ratios exactly where you want them. In the case where you can't set the ideal ratio, set your gear as close as the game will allow, then calculate from that ratio to find the next gear.
In the case of some cars, you may end up with final gearing that is so short, they end up hitting the rev limiter on the straightaways. Those are the feeble, torqueless cars that rely too much on gearing to generate torque. Should you end up with one of these lemons, you will have to work backwards from the expected top speed, multipying the drop ratio to find the next lower gear and so on. These cars must be re-adjusted for each track.
Now that we've set the gearing for the car, it's time to adjust the handling. In order to do that, you must know what each setting does to the car. I'll start with the springs.