Long post incoming. I've spent extensive time with both games. 150+ hours racing in Forza (maybe more I haven't checked my time lately) and I've got every gold license and every challenge in GT5 golded that's available for a level 20 driver. Both using the same wheel, a Fanatec PWTS with clubsports.
My impressions.
Both are great games with a very similar focus. I play lots of racing sims since it's the only genre that I'm good at. I just renewed my iRacing sub for another year. Prior to Formula 1 races I run the track the race will be on in rFactor with the FSONE 2009 mod. I run the tracks for 3-4 hours to get a good feel for what I'll be watching any given sunday. I've played most every sim out there. Ferrari Virtual Academy, RBR with the RSRBR (rallyesim) mod, NetKar Pro, Simbin games, NFS shift heavily modded. Hell I even play and love recent codemasters games although they're not really sims at all. It''s been years since doing so but I also used to have an old 240sx that I would run at a local club's track and down in College Station on a regular basis. I've since sold that car and am concentrating on my family and saving up for a bigger house, anyway, in a few years I'll pick up another FR car and go back to doing track days at the local track.
Anyone arguing that one game is SO MUCH BETTER than the other is a moron. They're both very similar games with similar design goals. Each game does certain things better.
GT5 has better handling with the wheel and primarily because Forza has an active steering assist that you cannot turn off. This is really frustrating because Forza does so many things better with the wheel. I can tell via FFB when the rear is stepping out or I can feel a FWD car has torque steer. I can't feel either of these things in GT5. I'll explain why even in the technical sense if Forza actually has better FFB why I just can't give it the nod over GT5 at the end of the post.
The vehicles in Forza feel flat, and there's something wrong with the suspension modeling, this feeling of flatness is exacerbated by replay cameras that are LOCKED on the car so you get less of an impression of visual body roll during replays. GT5 handles the feel of the suspension and weight transfer better.
Both games have issues. Incorrect specs, modeling, and weird things with some of Forza's cars, especially some of the DLC vehicles. GT5 seems to have the brake balance wrong on almost every car. The rear wheels should not lock up before the front wheels on almost any modern vehicle but that seems to be the case in GT5. Tire grip seems to go from unrealistic levels at the bottom end to a happy area around comfort soft and some of the sport tires to unrealistic levels at the top. The racing tires don't have the correct amount of falloff in the tire force curve. You can't have universal vehicle settings like turning Traction Control off as a preference for all your cars. GT5 comes up lacking if you're using an H-Gate shifter as well. They introduced some kludges to prevent power shifting so Clutch users don't have a speed advantage. Stupid decision.
Revisiting the Forza steering assist issue: On the full 900 degree setting I only have to counter steer about 60 degree for the car in game to go into FULL OPPOSITE LOCK. It's why the game feels so easy with a wheel. It also removes a lot of the tension since it sort of corrects slides for you. For instance in GT5 on the full nurburgring AMG intermediate challenge I dipped the rear wheels into the grass coming out of a corner. This sent the rear wheels wide and I had to counter steer, and I had to work for it. As in I hit full opposite lock at 450 degrees feathered the throttle and unwound the steering wheel so I didn't go into a tank slapper. My heart was pounding and I could hear blood rushing to my brain. I can't really get that feeling with forza because it holds my hand too much.
I think GT5 has higher highs and much lower lows than Forza 3. Forza 3 is a more consistent experience, and really excels at tuning, community features, controller interpolation, tire falloff and modeling for the entire range of tires, sound, some graphical aspects, and collision between vehicles (rubbing is racing). GT5 excels at vehicle dynamics, huge variety in the single player campaign, presentation (not counting some weird UI decisions), overall art direction, and the variety of experiences you can have(yeah I mentioned this twice, it's the best part of the game).
