I have to give my input on this one.
First of all, I was a controller-only player up until the last years of GT4. I was Israel's GT4 champion in 05 (doesn't mean anything, which I will explain why in a minute). Thanks to that title I got to go to ESWC that same year, and try my chance at the world championship in GT4 (I didn't win).
Couple of things to note: I was one of the very few to use a controller. Most of the challengers used the DFP. The last race for the title was on Circuit de la Sarthe, with 4 players using the DFP on the Pescarolo GT race car. It was intense and immensely good to watch. When I got back from Paris, my DFP was already waiting for me. Now, to say that I felt difference between using the controller and the wheel would be an understatement. The difference in feel is like night and day. Now, I personally don't have a driver's license, so my word on the subject may not be the most professional. However, even my friends with dl say that the game feels incredibly realistic.
Now here is the catch, as I see it, with this whole 'simulation' aspect. GT self advertises itself as the real driving simulator. So, I think the key word here is driving. To me it means that the most basic part of simulation in the game is the driving aspect, and the way the cars behave while on the race track. I don't think it can be argued that the feel of the cars themselves and how they drive in extremely well done. The parts that the game is getting all the boo for are the damage, racing rules, tire simulation (granted, a BIG part), and several others which I can't think about (please help me out with this).
Even though the game is missing on several key aspects (which in part maybe will be fixed in GT5), I can feel the difference between all cars. The differences can never be as evident as real life - no matter which game it is - as driving a corvette and a nissan GTR in real life is irreplaceable. Games and simulations on the PC and consoles can give you THIS (demonstrates with hands) much feel - because they are meant to be also games. Forza and GT and many of the simulators on PC are like that. In spite of this, to me (and my friends and many many people all over the world), the driving aspect of GT is fascinating - according to them it feels very real and very convincing.
And while you can get better time with a controller over a wheel, the feel is not comparable! GT5P's cars feel different, and I blame the case of minor differences on the fact that we can't feel the cars themselves - we can only feel an aspect of their behavior, and it is that particular feeling where GT excels in. It simulates those cars basic feel differently, depending on each car, and in the end that is what the game's motto is all about - it simulates the way the car behaves on tarmac, in a realistic way. It is not the best, but it is better than others and is believable. That motto has evolves with the years, but back in the days of GT1 that was very much the case. This time it is a very different story, because we all need to feel that the game has evolved with the times. I (and many many others) feel that the physics are still top-tier.
There are many senseless post in this thread, and mine might be with them, but I feel that many players think of the whole aspect in the wrong way (to a degree). Fanboys asides, GT and Forza each simulate different aspects very well and in a very realistic way (I never played Forza, hence why I never said anything about the it is played [because I just know that someone will try using that against me], but this is the impression I got from reading on GTP and other forums). There is no BETTER, there is better in this better in that.
The bottom line is that to me GT is better because if certain reasons that include ideals and aspects of simulation. Forza is, no doubt about it, a great experience, but it is not on the same page as GT to me (READ AS same page, NOT AS same league).
Wall of text off, maybe will continue later.