According to Kazunori Yamauchi it may be as late as in the end of 2008. Further on he explains that the reason for not having crash damage is reluctance from car manufacturers then he states that CD might be featured in an upgrade. I know it is a 'could be' the thing about the game being delayed but when you start to talk about this so far in advance of the release it's really worrying.

 Source:

http://www.computerandvideogames.com/article.php?id=167050 

That is a weak excuse on Yamauchi's part. Yes car manufacturers are hesitant to allow crash damage to their vehicles but Forza Motorsport 1 had crash damage on the original X-box. Its sequel has crash damage as well. If they don't want to implement it, just say it.

Wow... GT4 was supposed to have crash damage and online play... and obviously it didn't.. how many times are they going to sell the exact same game with a slight graphics update? I was pissed off with GT3 for this reason. I bought a PS2 for the game expecting it to be a step up from GT2, well obviously a few minutes into the game I realized I was duped. Not this time... not again!

Yeah sure Yamauchi, say that to Codemasters and Colin McRae

How much father is the Forza series going to gain on GT before GT actually starts implementing more sim-racing actual elements?

If I ever pick up GT5, I'll hate having to cheat so easily without damage. Sim damage is one of the biggest advances in racers, ever.

Isn't the lack of sim damage the reason I could just grind along the wall on the endurance race ovals with the button taped down and win while I slept?

What a sad exuse... GT5 is even less of game now.

Does anyone really make a choice of which car to purchase on how it perrforms in a video game?

Which blatantly ignores the fact of its declining sales with each version. Even if Gran Turismo 5 sold a copy for every PS3 sold world wide it still wouldn't stack up to its predicessors.

How come Sony gamers can say the Wii being the best selling console of the three doesn't make it the best Console but then say that GT being the best selling racing sim makes it the best racing sim? So sales only matter when on your side?