To me the environments in Forza 2 are really good. If there' s a graphical leap that i noticed from Forza 1 to Forza 2, it' s the environments. It' s good that they paid close attention to making the environments as detailed as possible. Sure they' re real racetracks and may look sparse at times compared to the likes of PGR3, but the key to photorealism isn' t filling the screen with so much bustling activity, but rather, to NOT put anything that doesn' t look real, like for instance sometimes a textureless building can look more photoreal than a building with a lowres texture if it' s lit properly.

One of my favorite tracks graphically in Forza 2 is Laguna Seca.

Take a look at these real life videos from racing on these tracks:
(click to watch, right-click and " save as" to download)

Mugello
Mugello again
and again

Nurburgring
Nurburgring 2
Scary drifting in the Ring
The ring again
and again
and... again

It looks just like that in Forza 2. The same feeling, the same movement, similar light, same track design, everything is just done right in Forza 2. It' s goddamn perfect OK!
I don' t care if GT5 looks more realistic, it doesn' t look " right" .

Ginjirou, do u mean by any chance that forza 2 looks more realistic or better than GT5 ?

It does not look more photo realistic than GT5 but it has captured the real look of a racing view IMO.
If that' s better or not is up to personal preference. If you like things to look exactly the way they would on a picture then GT5 is the best. If you want to capture the " feeling" of racing then Forza 2 looks better.
That' s why Forza 2 might look like some ad for a car manufacturer or something.