I haven't been racing for all that long, and some of these have been mentioned before, but here is my list so far...
RACING
The AI needs to be improved and made more challenging. I am tired of getting bumped by a car trying to race its line when I am clearly there already. I am also tired of the AI braking mid-corner for no reason.
The racing needs to be more competitive. For example, with equal hp, equal weight, a "standard Z" should not be able to easily beat all the JGTC cars in the Pro race. I want difficult races. Like you have to drive at least silver-level driving to remain with the leaders, and pull off some good passes to win (though maybe I haven't gottent to the difficult races yet).
RACE SERIES
Make race series more like the "real" ones. JGTC for example, have GT300 and GT500 cars running together (6-10 of each would be great). Have some BTCC, DTM, World Challenge type racing with very tight regulations on weight and hp, etc. Use the rewards/weight type system for winning, so it is more difficult to the championship.
You could also have penalties for "aggressive driving." Bump too many cars, get a drive-through penalty. Do it more, get black flagged.
CARS
Less of them. Do we really need trucks, SUVs and mini-vans? Less cars, but better and with more options.
Different price/performance for the upgrades amung the tuners. Some may offer smaller turbos, while others may offer bigger units. Some superchargers, while others perfer the N/A route. And each should have different price/performance.
Paint them different colors (even if it is selecting for colors the car is usually available in). But, please, no vinyl. (body kits would be okay though).
TIRES
Have tire shops instead of buying tires inside the tuner. Heck, you could even have to buy new tires each race, or run on old tires. That would certainly make consecutive racing a little more interesting.
VEHICLE DYNAMICS
Better represent dyno curves. For example, a 500hp Evo should have very little torque down low. And, you should blow an engine if you rev it too hard.
Also, make boost controllers an option. Have a big turbo, but want to turn down the boost, you should be able to.
CRASHES
Even if you don't model damage, at least make the car unoperable for a large crash. Hitting a wall at 150mph should do more than shake the screen a little--you should loose the race.
SPONSORSHIPS
It would be a interesting idea to via for sponsorships. Race well, attract better sponsors. Get an HKS sponsorship for example, you get free stuff, but can't use anyone elses equipment. This would make for interesting decisions if the tuners had different equipment/performance.
MINOR NIT-PCIKS
When buying wheels, it should cost more, but you should be able to put your old wheels back on.
If you buy a used car, then sell it, you should be able to get roughly what you paid for it (dependent upon use of course).