The thing is this - Famine's description is correct, at the start of this thread. And in the light of that definition, every game that at least aims to imitate real life is a Simulation. A game that instead focusses on the gaming aspect is what we refer to as Arcade (although even that is confusing because the best Simulations were once found in the Arcades). Often a game that is Arcade will very clearly indicate this, by virtue of Checkpoints, Kudos and so on.
Gran Turismo very clearly aims to Simulate but ALSO has an Arcade mode. But the way the Simulation part of the game has been designed clearly suggests it intends to Simulate rather than offer a 'game'. Compared to specialized PC games GT certainly lacks features, especially when looking at the race end, but what's being forgotten is that GT also offers a lot of stuff many other sims do not (washing the car, engine break-in and wear, oil change, parts upgrades, performance test tracks for 400m and 1000m times, top speed, etcetera. This was already present in GT3, and we have as yet hardly a clue of what will be finally present in GT4.
Also noteworthy is that road cars handle very impressively like the real thing already in GT4 Prologue (particularly on Street tires), and that is without tire wear or anything similar being implemented yet.
In the end a lot depends on what you ask from the game. Driving a street car that comes with ABS stock, without TCS or other assists selected, on Tsukuba or Fuji Speedway and with Street Tires fitted is already quite realistic in GT4 Prologue. It will be interesting to see how realistic the game will or can end up once it is finished. The main thing keeping it back from being as 'hardcore' a Sim as some of the games that focus on a specific car or car-type is that it has to deal with over 600 cars, and any variable it implements, it must implement realistically for all those cars. So if PD decides they will finally allow true ABS-free driving, it will have to deal with new pressure calculations that render realistic braking characteristics and then set the right parameters for all those 600+ cars.
I have played many Sims and I loved almost all of them for specific features, but as an overall experience I currently prefer GT4 Prologue.