Thom:
Well, you ARE olda nd cranky, but that's not important right now.
As an avid DE / autocrosser and occasional video racing gamer, here's my $0.42:
Video games are slowing taking over reality, or so it seems. I think the big problem is that most people (kids and adults alike) that play video games don't have any real world experience - they've only driven a car to its limits (and beyond) on a video game. Thus, their perception of performance cars and performance driving is rather tainted.
In a video game, all it takes is a 'click here' and a 'click there' to tune your suspension and add 500 hp of power to a car.
In terms of making a car simulator where the sim actually reflects true car dynamics - those games would be very difficult to play, and as such, it wouldn't sell too well. So games are toned down quite a bit to make them more 'playable.' That applies even to GT-3, which many have stated is the 'most realistic' car driving sim out there. (I disagree).
That said, IMHO, the PC-based Need for Speed series of games seems to have the best representation of cars and physics out there. Especially the Porsche Unleashed version. Still not the most accurate, but if you're running on a skid pad in NFS-PU, and happen to lift off the throttle, your car's rear will come around for sure. In GT-3, I've tried to induce oversteer on a skid pad in the wet, with a Vette travelling at around 80mph, and the car just stays planted, despite lifting, hitting the brakes, and even yanking the 'virtual handbrake.' Completely unrealistic.
The scariest aspect of this is when you get one of these video game experts out there on a real track. When the real laws of physics take over, the 'reset' button quickly becomes the 'fix sheetmetal' repair bill!
Sorry for rambling,
-Z-man.