At the moment the best "sim" racers dont have the graphical pleasantness of Codemaster's Ego Engine (Grid/Dirt). Most of the development has gone under the hood. Grid is somewhat between a "sim" and an "arcade" racer imo somewhere around a 40/60 mix of "sim/arcade". Their cars drive differently and wear and tear affect performance. When I got the demo, it took me a while to get used to it and when I started playing other people who havent played it, I would just stop and look at them in my rear view, hoping they would eventually get off the grass and in the right direction.
The only racing game I know of that has a next gen graphic engine and is targeted at as a sim is the Formula One game Codemasters is working on, tentatively dated for sometime in 2010.
Meh. I was actually playing GRID today, but IMO the sim/arcade mix is probably closer to 20/80 or maybe even more... I say that because there are absolutely no options for settings on cars, nothing to customize or tweak.
Also, cars don't drive much like they should. I'm not even talking about the feel of the car, but the speeds of the cars and how they drive. I was doing a drifting competition in an RX-7, and I didn't have to shift to 2nd gear until 90 km/h... not only that, I could pop it up to 3rd gear, spin out to a completely stop, then stomp the pedal while still in 3rd and spin out like crazy. Doesn't seem to make much sense to me...
Despite all that though, it's a pretty fun game and I enjoy it.