Replays and Images always seem to be not part of the core game save data. I just export the photos I want to keep to the XMB and then store those on USB, same with the replays I really want to keep. That way I keep my photos and replays to a managable level.
On the subjecy of damage in Practice Mode (where I spend most of my time not racing) - who know how "realistic" it is, but the impact (pun intended) of wreckless driving is felt right away. You have just a skiht off and the fender is dented and the
wheel is impact - you feel it and notice it. What a great way to force clean driving