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Apples and oranges here.

GT5 is supposed to simulate actual cars and tracks with emphasis on the cars themselves.

Hard models vs. soft models. Hard models are always going to have the advantage in looking more realistic assuming the modelers worked off blueprints of the actual cars.

Lighting is a tough call. I'm assuming GT5 is supposed to have the most realistic outdoor lighting. That would typically be one source: sun, with headlights for darkened track sectors or night time sectors. If they do have night time courses, it's an entirely different ball of wax because all those track lights become your primary and secondary light sources, with car headlights acting as dynamic light sources.

GoW III on the other hand, regardless of how realistic the anatomy of the models are supposed to be, is still highly stylized with lots of unrealistic VFX type lighting solutions. Environment lighting as well is going to be highly stylized as well as opposed to a realistic set up occupied only by sun light, torch light and wood fires.

So which will look "better" will likely be a subjective opinion.

GT5 will probably have smoother frame rates (closer to 60fps most of the time) and will also have a higher native render resolution, which does go a long way in making the visuals sharper and more detailed as opposed to 1280x720 displayed in 1080p mode (upscaled).