One thing makes me wonder if Gran Turismo 5 might not be closer than we think. Polyphony has put gobs of work into many aspects of GT, from the physics engine and graphics to the number of cars and tracks in the game. But one thing a vocal minority has been clamoring for is damage, and realistic damage isn't easy to model.
I'm still in the thick of Forza, and one of its much touted aspects is damage. Now it's a basic damage model, and it seems that there are a few basic templates based on a small number of collision possibilities. You see cars from time to time with the same damage on them, but it's rare. The model they put in the game works pretty well. However you still only get a few crumple models, a couple of dangling nose and fender models, broken windshield and light models, and that's it. And the effect of damage on the car's behavior is even more basic: sluggish transmission, misaliged wheels, weak engine. I expect that the amount of time the Forza team has had to work on Forza 2 will only yield a slight improvement on car damage.
Which brings me to Gran Turismo 5. Kazunori stated that damage would be done right or not at all, which in his almost perfectionistic view probably means the equivalent of an automaker's damage modelling algorithm, where the car is built of substantial individual elements, each with its own durability and stress physics. I have little doubt that the Polyphony team negotiated (or begged) to have access to the crash data of all these cars. I think they probably succeeded in at least getting a basic component physics engine going frm data they bought from the manufacturers, and I think this is the only thing that makes sense. I don't think they would be happy with a simple arcady damage system such as Forza has.
I also think that Polyphony has been working on GT5 for a couple of years at least, so who knows how close we are to seeing a Gran Turismo 5 on store shelves?
Edit: one more thing. I do think that if Kazunori refuses to release anything less than a dream-come-true Gran Turismo, and that the work so far is only a "mild nap" of an improvement over GT4, then we may well see GT HD get released, and I'd sure be happy to have it.