Yeah, comparing a game released in June 2007 to one released in March 2008? It's pretty obvious which one will look better.
As it stands, Forza is ahead in terms of online play, sounds and customisation. And even damage, despite how poor it is. GT5 will obviously look better, it's had more time spent on it and Forza 2 is a full game that was out almost an entire year ahead of what is, essentially, a demo. GT5 is ahead on physics and looks, easily, but the sound (which is a very important thing in a car) is still lacking behind and online play is still a disaster, even with the ghosting system.
Having heard GT5 may not be released until 2010 surely it would be better to wait and compare it to Forza 3 once it's released? That way we will have two full games released at roughly the same time (No release date on Forza 3 but it's estimated at late 2009) to compare fairly!