I play Shift 2 with a wheel on elite mode and my opinion of the game is based on that.
While it sucks that the default controller settings are really bad and that the default settings for some cars are not ideal there is nothing wrong with the underlying physics of the game. Actually they are by far the most advanced physics on any console racing game and can be compared favorably to even the most advanced PC sims. Also the amount of tuning options (steering lock, tire pressure, caster, suspension tuning, etc) can make a real difference and transform any car with bad defaults to a great driving machine.
While there are various advices on what are the ideal controller settings are it's all a matter of style. You must (unfortunately) spend the first races of the game to fine tune the wheel settings to suit your driving style. Actually it's not that difficult. If you find the car to steer very fast and the steering to be imprecise decrease sensitivity or increase maximum lock, if the car seems to not steer quickly enough and there is 'steering lag' increase sensitivity and/or decrease maximum lock. Thankfully after you have done that the game is brilliant!
Then when you find some settings that seem to fit most cars, fine-tune your favorite cars accordingly (like adjusting steering lock) and taking advantage of the excellent live-tuning feature while reading the description on what every tuning setting does. Also the 'physics hud' can be helpful to see how the car is behaving (are the tires too cold? too hot? is there too much body roll and a wheel is losing traction? etc) and to admire the simulation engine at work. I am not aware with any other console racing title with such an advanced simulation model and tuning system that is based on car behavior data (and no, the GT5 telemetry doesn't count, not enough information and besides it doesn't even have customizable tire pressure or temperature readings!!).
I find Shift 2 to be realistic, exciting, rewarding and most importantly fun and never frustrating or boring! Even tuning cars on different tracks and saving setups for each track is fun! Always remember that tuning on Shift 2 is based on what is logical and not some magic formula. For example if your high powered car is neutral at slow speeds but it has violent high speed oversteer then increasing rear downforce would probably correct it as there will be a stronger force pushing the back of the car at high speeds, and then of course you may need to stiffen rear suspension, etc. Also you can search the net for real-car tuning tips and use them to tune your cars in Shift 2. Of course you must always try to visualize the forces on the car and understand how every tuning setting changes these forces. This game has amazing depth!

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Some people are calling Shift 2 arcade just because it doesn't handle like GT5. They are extremely narrow minded! Besides there are parts of GT5's simulation that are way off and in my opinion prove that there is something really wrong with GT5's physics. Things like, unrealistic car stability over curbs, after jumps, how easy it is to catch a slide and there is no risk of over-correction, lack of customizable tire pressure, lack of tire temperature readings, etc. Shift 2 (once you fine tune your wheel settings and the cars) is much more realistic and has much more involving handling, not to mention much better AI, sounds, realistic damage, collisions, consequences of reckless driving etc. It's an amazing game!