Right off the bat, there are a couple of extenuating factors that I think are worth mentioning before I delve in to this. 
 
First, I have played both games with friends locally and online. 
Second, I played GT5 with a wheel and F3 with controller only. 
Last, this is probably gonna be a long read, but I'll try to make it worth your time. This will only really interest people who care about racing games more than the average gamer.
 
-The Driving/Racing Differential.
      I fully concede that GT5 tackles the DRIVING experience on a level that is beyond Forza. I can sit in a premium car and take it around a track and feel like I'm coming as close to the real thing as possible. However, as far as high-adrenaline racing goes, Forza tops GT on all levels. The sound is better, the AI is just on a different level, the sense of speed is more accurate, and everything combined works great together. When I race in Forza, I feel like I'm always battling. When I race in GT, I feel like I'm just running to the front of the pack and trying not to mess up. No confrontation, no aggression, and certainly no mid-turn overtaking from the AI.
 
-The Handling and the Feel.
      GT5 tackles car handling in a very realistic manner. There is more technical stuff going on in GT5 than I care to imagine. But I'm not sure that this translates to the actual gameplay so well. The way Forza's cars handle is so much more fun to control in my opinion. They seem more predictable, heavier, and more solid than GT5's cars. A lot of this is probably opinionated, but there is something about the way forza translates power and grip that just feels more like the real thing to me. 
 
-Cars.
      Recently a friend of mine came over with Forza 3. I say recently because the important aspect isn't that I have only just played it recently. The importance here is that I had a break. I went about 5 months without playing Forza, and played GT5 in the time between then. While in GT5 I missed some cars, but I didn't realize how fucking bad I missed them until I drove them in Forza. Here's a quick list of where Forza 3 is now compared to where GT5 is. Everything I noticed GT5 missing:
 ~Lotus Exige- Are you kidding GT5? 4 Elise's and the Evora, but no exige? WTF were you thinking?
~ Aston Martin DBS, Vantage V12, and really anything but the DB9 if you only count premium. The two biggest driver's cars to come out of Aston and you have neither? Awesome. Oh, and Forza 3 has the one-77. Just sayin.
~ Porsche. I mean what the fuck? There really isn't much to say about this. And the sad part is, even if Poly put them in, half would probably be premium. If you were lucky. Or you know, 2/10 if you're polyphony.
 ~ A huge number of small-time car makers have made it in to forza now. And the updates are consistent as well.
~ BIGGEST POINT. All of these cars listed above that only Forza has(and there are tons more), have something in common: None of these cars are fucking half-assed pos's from last generation. Imagine that.  Oh and, NONE of them have matchbox-like undersides. Nice "perfection" there Kaz.
 
- Why the "time" argument is invalid for the lack of premium cars and other content in GT5.
       6 years. 6. Think about that. Let that sink in. The entire Forza franchise has come up in this time. 3 games. GT5 mustered up 200 well-done cars, a lackluster online, bare-boned customization, 800 shitty reused cars, and a good photomode.
 
At the most, Forza 3 was in development for 2 years. Is Forza 1/3 of the game GT5 is? Hell yes, and so much more. By now, it has 500+ COMPLETE cars, a fucking huge online component(the best in the genre, no contest), the deepest customization, and it got some tracks too.
 
By this point, if Forza 3 would've been developed for 6 years it would've been a full-on MMO with 1500 complete cars, constant updates, hundreds of tracks, and a beastly customization level. I know that what I'm saying is unrealistic, but I'm using this to put what GT5 could've been in to perspective. What it SHOULD'VE been.
 
- Ends and Means, with Fun on the side.
 
In 6 years, GT5 mastered virtual driving, and did justice to 200 cars. Dabbled in NASCAR and attempted rally. I had to ask myself: "Was this worth the wait? Is this any better, or more fun, than Forza 3?"  No. And at this rate, Forza 4 will close the gap even more. I'd rather drive, and race, 500+ cars that matter  and that are 80% accurate, than to drive 200 90% accurate cars, look at stupid duplicate cars that are just fucking marketing fillers so they car say "1000" (lol 40 skylines, 15 miatas, 2459048 civics, but no Porsche),  and have the inconsistency of racing GT4 cars.
 
For fun, for the racing, for the community, for the content, and for the love of all cars, Forza 3 still reigns supreme. Without a doubt in my mind.