What's the point in having damage if you won't use it because of the AI?
Between AI and damage, it's obvious that the first should have been given preference during development in GT5. But, as Kaz already stated, they listened to the fans. And all one has to do to understand where we are now, is search the amount of threads asking for damage versus the ones asking for better AI.
So I guess in a certain way, it's our fault, as GT gamers, that damage was given priority over AI.
I think it's very interesting for developers to listen to fans, after all, we are the ones who buy their products, but such thing has to be done with caution. People ask for a lot of things that can be labeled as "very bad ideas". For instance: a lot of people thought that the free roam with speed limits that Kaz suggested some days ago is a good idea.
Not judging the ideas per se, but there has to be some focus in development. I mean, what's the point in having +1000 cars, rain, damage, this, that, etc, if something as important as the AI is missing?