If you ask me, its not untill you actually compare games on your own tv that you discover which truely looks best. When you compare Forza 3 and Forza 4 side by side you realize just how big of a difference there is between the two games. The new lighting system is what really makes the difference, its also the reason i think Forza 4 looks better then GT5. I will admit, i actually think the enviroments look a bit more realistic in GT5, however they look alot more dull. Forza 4 took more arcady looking enviroments and made them look more visually impressive then actually are, and in my opinion it makes Forza more visually appealing.
On a note that is un-GT5 realated, i must say i am abosutly impressed with the new physics engine made better with sim steering, its nice too be able have soo much control over the way you go around a corner. I don't i've ever played a racing game on this generation of consoles that felt this realistic. The added body roll does wonders for the fell of weight transfer. I still think there should be more body roll though, but the suspenion feels alot more realistic, epecially when you hit bumps.