Oldschool and classic:
X = Accel
Square = Brakes
Ball = Horn
Triangle = Reverse
R2 = E-brakes
L2 = Look back
R1 = Shift up
L1 = Shift down
D-pad = Wheel turning
L3 = Wheel turning (rarely used)
R3 = Accel / Brake (rarely used)
About the settings:
It depends your layout and your style. Some drifters like to emulate a wheel response, so they set their wheel turning speed to very low (-2 to 0) and some others are used deal with the in-game g-force in a diferent way and prefer to have fast answers from the DS3 and still maintain smooth transitions (3 to 5). Also, the controller layout and settings will define the car setup style (springs rate, damper levels, lsd...). Its highly recomended the use of the ABS, at least 1 level, specialy if your desired button not be analogic (R2 trigger, for exemple).
I don´t defend the use of d-pad for turning, but is what makes me feel more confortable (i use D-pads since i was kid and resisted to use analog since GT1 on PS1, so...). I can domain a car using the analog, but makes me feel like im writing with my left hand. Im very happy that GT5 still providing a dynamic engine, witch makes me choose d-pad to drive, if i want to.