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Seems no matter how little throttle you apply all that wants to happen is the car wants to swing around the corner, crash into a barricade and cost you the challenge.
If you didn't know, If you push the triangle on the umd icon. you'll see that it has an update button. I think most games will have it now, I've noticed Rock Band Unplugged has.
AI cars bumping into you during the challenges should not cause the challenge to fail.
But I definitely agree with light contact being allowed during Driving Challenges. If anyone has tried the O-1 test yet you can clearly see during the demonstration how the GT-One lightly taps the Merc off-line in order to muscle for the finish line. Try the same yourself, and you'll fail 50 times in a row.