I am glad they have repaired the tracks. Forza and Forza 2 tracks were not good.
How do you feel about the physics?
While I haven't studied them in very precise detail yet, they are good. I think at this point if there is any weakness at all, it's in how the physics are communicated. There are a bunch of effects that I can tell are being simulated from studying the behavior of the car, but the force feedback or visual cues lack to communicate them. Most obvious example is when you are driving in cockpit view, a car can lean over as you are taking a heavy turn and the gravity shifts. You can turn on the (excellent) physics readouts on the tires and springs to see things like camber and shifting pressure change, but the cockpit stays perfectly level versus the horizon, and it's not as clearly communicated through the wheel's force feedback either. Now while the latter could be realistic, especially in an assisted wheel, it's still a missed opportunity to communicate what otherwise would have been communicated by gravitational forces on your own body.
Some people say it is good some people say it is not so good. I have read your postings and feel you can have a good unbiased opinion on this.
In general I would say they are good enough. There are definitely some highs and lows, and like I said, and as Joshua suggests, I want and probably am going to do some tests. Right now all the cars for instance drive like they have been set up incredibly rigid, with tough springs, high pressured tires, etc. But then for racing most surfaces, they would and should be, so that could be one reason. However, a new car comes straight from the dealer, so strictly speaking I feel it should be up to you to make the car more suitable for racing by setting it up, if you want to. But it could also be that this is part of the physics model. I can't make this out until I've experimented with setting up the car myself, testing various extremes.
Most important is, I think, that the cars feel fun to drive, and are difficult enough to challenge you on the hardest difficulty with assists off. Furthermore, the physics is realistic enough to force you to drive realistic lines on the tracks. Importantly, there are very few faults that really take you out of it - the only one that bothers me right now is that going off-track has nothing to do with realism whatsoever. Instead, it takes the place of penalties and other anti-cheating devices, in that off-track will invariably slow you down, and in extreme cases will act like a super powerful magnet that can bring your car to a near full stop instantly.
While you stay on the track, however, the feeling is pretty good, and so far driving with friends online (always just serious racing so far, haven't tried any of the other modes) has been satisfying. I haven't been winning much, but I recently discovered I was actually the only one who kept both TCS and ABS off, and I still mananaged to keep up reasonably well on the tracks that I knew from other games.
(to be fair, I drove on Road Atlanta and Road America in the old GTR mods and such, but I've had to basically relearn those tracks now, forgotten too much about them, and there were already 100 truly different tracks available for those mods then ... !)
Forza 3 is the first Forza that I actually enjoy driving, and from where you are coming from, I think I can safely recommend it to you as well.