TokyoDrift,
Let's clear two things out of the way.
1. We're disappointed in graphics part of this demo, right?
Physics-wise.. from 2 hours of solid play, I'm loving updated/improved physics. Definitely improved over 2007 Prologue. Overall, I feel very positive about final GT5 in terms of physics. In terms of graphics, now, I think it's even worse than 2007 Prologue. I still have 2007 Prologue installed on my PS3, comparing back and forth.. this demo indeed looks worse than 2007 Prologue. (My observation).
2. File size. *Installed* demo occupies indeed about 204 MB in size on HDD. This means the demo is really small in size.
This is not the case where compressed file for download is small and once it's installed/extracted, file size gets a lot bigger.