In my opinion Shift 2 (in elite mode) has by far the most realistic handling model in any console game. Also I think it could challenge (and even surpass) many of the PC racing-game-sims on the physics department.
Shift 2 forces you to respect your car, the opponent cars and the track. You can't push your car too hard, crash on other cars mindlessly, pass them without planning your moves or expect to be able to hit curbs at full speed or slide off track and not get punished. So in this way I think Shift 2 is providing the best representation of track racing than any other console game (even though it lacks weather, pit stops, flags and qualifying).
In a more technical note I find the handling model of Shift 2 impressive cause I get the feeling that there isn't some kind of 'magical' force that pushes the car forward or helps me to steer and keep the car under control. In Shift 2 the car accelerates, steers, spins, rolls and crashes due to the net result of the different forces that are applied to the car, suspensions and tires. I think that's a great technical achievement!
I will admit that there are some flaws in Shift 2. For once it's quite difficult to find the correct wheel settings. Also some cars seem to have either too slow or too fast steering. Thankfully the live tuning feature is a great way to 'fix' some cars that don't seem to handle so well 'out of the box'. But once you tune your wheel and cars correctly you will have a great time in Shift 2. 👍
Frankly, I prefer to focus on what a game does well and not nitpick every tiny detail and omission. I believe when the core game is great you can forgive the various small flaws as long as they don't detract from the main game. I am having a great time with Shift 2 and I am loving it so far. It's a very challenging and fun game with incredible depth! If I ever get a PC fast enough to run Shift 2 I will get a second copy - that's how much I like it!