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Did they need to ? It's obvious that for better calculation/animation you need hardware resources, and what when you get to a point where there is no spere bits of it? You downgrade something or do it like PD did.
I'm totaly Ok with 720p but they wanted to shine with a 1080p racing game.
Yes all you are saying is what you think,it could be true but it does not mean it is why PD don't have a decent damage model.
also GT5 doesn't stay 1080p 60 fps all the time.
ANyway if somehow the reason for not implementing the damage model is a reduction to 720 p then that is a price I'd gladly pay.