Well, as I much as I tried to avoid doing it, I deleted the update (spec III) and redownloaded it again to check if something went funny with my PS3 in that it can't run GT5P properly but with the original install, it ran perfectly and I've tried Tekken 6 and its running perfectly as well as well as the GT5 TT demo except for the frame skip but a lot of people seem to have it so it must be a software issue. I remember asking a computer engineer about my original xbox suffering from a bit of slowdown in some games if the gfx card is malfunctioning but he told me when it comes to things like that, there is no middle ground, it either works or it doesn't, nothing in between.
The game is running consistently but its kind of hard to explain what it is exactly but it just doesn't feel as smooth as the original game.
I was thinking of giving Sony a call to ask them but I'm guessing that they'll just tell me "some games don't work as well others" and thats it which is a fair point but obviously, the main idea is that I hope its the game and not the machine itself. Its not old, I've only had it for a year exactly.