I Love Forza 2, but I have to play GT5 before I judge which one I think is better.

i think even GT lets you upgrade the cars you win

I have played Forza Motorsport 2 and I must say it is a truly good game. On par with Gran Turismo....

Sorry, if you believe Forza 2 is better than any of the GT series, you are misguided. Damage is irrelevant unless you want to suffer blood boiling frustration as the computer takes you off the road for the 8th time when you stray off the line by one iota. The AI, if you can call it that, in forza 2 is purely on rails, failing to react to any manoeuvres you make.

I can't believe people still rate this game.

I hardly think that Forza 2 damage physics are realistic... The feel of the cars themselves is good enough, but a lot of physics does not equal realistic physics (see Crysis for clues...).
I'm a car enthusiast, more so than a gamer actually, so I happen to know a lot about cars and I can tell you that there are currently no games that are realistic in respect to damage.
It takes so little to destroy a car or make a minor malfunction occur that will have a massive impact on its driveability.
They have made a decent attempt in Forza 2, but it's far from realistic.

 Also, I can't believe that people compare Forza 2 to GT4, which is on a last gen console debuting seven years ago... You don't see people seriously comparing Halo 2 to Killzone 2, do you? Same thing.

 Congrats, I think you mentioned 2 cars among 700 ++ in the game that can't be modified... Actually, I think the Tank Car can be modified. Did you seriously expect to add a turbo, some nitrous, slick tires and racing suspension on a "car" from 1886!?

This is the most flawed post I've read in here, I think. 

 And from your comment I can't believe you have spent any time with this game.  It is currently the best driving sim on the market... by a longshot... period.  The OP opened a can of worms with his thread, but it is accurate.  The simulation aspects and play quality of the game are both exceptional and currently top dog.  Yeah, the graphics are photo-realistic, but they are damn good.  Apparently you must be thinking of another game's AI because the AI in Forza 2 plays quite well.  If you try to force a position on the track where you don't have the line or the right-of-way, you will bump.  Imagine that -- you can't just push AI cars out of the way or expect them to always yeild the right of way.  Unlike other racing games, you can't force it -- you have to use finesse.  If you are in the proper line and have right of way, the AI cars WILL avoid banging you and as far as I have seen, the AI in Forza 2 is currently the best there is in simulators.

As an "overall" game, Forza 2 delivers in spades.  Graphically it is quite good and the 60 fps framerate makes the game silky smooth.  The simulation aspects are extremely well done.  While the damage modelling isn't "real world", it is pretty good and adds quite a bit to the game.  All in all, those who think this game "sucks" or "hate it" (that like driving sims) are clearly fanboys who haven't spent any time with it because the game is solid.  Period.  Read the reviews... 90 on metacritic.  Same on gamerankings.

That brings us to this question:  Will GT5 be a better game?  At this point it seems likely.  They are stating 1080P at 60fps with a much higher polygon count on the cars.  Early screenshots look promising.  In the end, however, the game will have to have a phenomenal physics engine to surpass that of Forza 2.  We'll see where the game is headed with prologue soon enough.

Damage modelling is *extremely* difficult to do well. Forza is clearly generous -- you can hit a wall at 30mph without completely totaling your car, because that would become more frustrating than fun. However, they do a convincing job of actually modelling the damage on the body of the car and they do a good job of damage affecting aspects of your car's functionality.  The reason damage is more fun than frustrating is because it affects how you drive your car without completely destroying you for making minor very mistakes.

The physics, however, are much, much better in Forza 2 than any GT game I've ever played. It's cohesive, and it's the first time I've played a racing sim and felt like I was actually approximating racing.

Hopefully GT5 will change things (maybe it can even retake the crown for a short period), but right now Forza 2 is the best racing sim available. It's not even close.

People forget you can enjoy forza 2 now versus waiting for gt. Whos to say forza 3 won't match gt5 or surpass it. I love arguments comparing currently released games that have been proven vs games not yet on the market. Reminds of me people waiting to see how much ass the PS3 was going to kick once it was out. Personally the only gt's I enjoyed where part 1 and part 2. Until the game is out there is always a chance it may dissapoint and this goes for any game. Can we keep it at comparing forza 2 to currently released games? Kind of unfair to compare a game that will basically be over a year old when gt comes out.