ToCA Race Driver 2
by Codemasters http://www.codemasters.com/tocaracedriver2/
I just downloaded the PC demo version. I liked it, and I ordered the full game. There is no real replacement for actual racing, but this game for PC or XBox does have many good points about it. rather than say it is the end all and be all to race games, I do suggest downloading the demo and try it for yourself. The demo lets you try one car/track from the DTM series, one car/track from the Australian Super V8 series and one car/track from a classic series.
Good graphics
Good physics
Good AI
Great sounds

Its all good and my opinion may differ, but give it a try. Its a free demo.

 

I picked up the game and I think it's great. They really expanded the number of racing formats from formula fords to rally racing to super truck racing and more. The graphics are very cool and the driving is just as real as the first one (maybe a little more forgiving).