Let me explain.
The two biggest flaws in GT5 are the dumb-as-a-box-of-rocks AI (which incidentally doesn't get any better as your driver experience level climbs), and the comically stupid "crash damage" (which also doesn't get any better as the game progresses).
In Forza 3, the crash damage can be set to off, cosmetic, or full. Cosmetic has no effect other than ruining how the car looks. Full damage means that you get heavily punished for driving like a dick. Radiators leak, engines and transmissions get broken, suspension collapses, steering pulls one way or the other - it's a joy, and it's a massive incentive to learn to drive the courses and cars properly.
The other issue - AI - is so far ahead in Forza 3 compared to GT5 that it's impossible to make a true comparison. It would be like a drag race between a McLaren F1 car and a 3-year-old pushing a stroller. I discovered everything I needed to know about Forza's AI in one race; in the third corner, I just had a nose ahead on the car next to me. In GT5, that's a disaster because the driving-on-rails AI would simply turn into you and run you off the track. In Forza, the car next to me altered its line and braked to tuck in behind me. Then four corners later, the two cars in front of me got into some sort of argument about track position, with the inside car sliding into the outside car, and the outside car retaliating. End result? The both crashed, the rear bumper got torn off one of them and I ran over it, damaging my transmission.
There were other things too. Sure Forza runs a lower resolution than GT5 but it doesn't have graphical pop-up. The shading doesn't suddenly change on the other cars. The shadows look great. The tracks have more variety in them. You have massive car customisation options - from custom vinyl and paintwork to infinite tuning of gearboxes and suspension. And unlike GT5 where you can simply win every race by slamming the best of everything into a car, Forza imposes car classes meaning you have to choose very carefully what you put into your car to keep it within the class restrictions but make it competitive. Especially in online racing.
For me, Forza has proven itself to be superior to GT5 in every realm. I urge you to buy it if you haven't already. You'll be amazed at how much more fun and less clinical it is to play than GT5.
Oh - and if you like customisation - below is a pretty simple example of the sort of paint job you can do. This is my Red Bull GTi getting some air :
