Trust me WJ, it's your PS3. I had a fatty 80gbs, and it started to get these flashes on screen of multiple colors, also some textures (on some games) were being stretched (like, on Assassin's Creed, Ezio's chin would stretch from his face to one side of the screen, all the way across the screen). If you try to play Assassin's Creed, you will most likely see textures being stretched, and if you log on PSHome, you will probably see the color flashings as well.
GT5 was the only game I could still play on my fatty (during november 2011 - october 2012), because it doesn't get these flashes on screen. A game well programmed indeed. But the textures might begin to stretch on it too, eventually. On generated tracks, it's not uncommon to see a wall or guard-rail on the place of the start/finish line. On online races, everything is fine, for most of the time (specially if the PS3's GPU is just beginning to deteriorate), but on career mode, you might see guard-rails "sprayed" with green and purple dots, as if it is a TV channel experiencing bad signal, like a very bad VHF/UHF connection.
I recently bought a new PS3, slim (1st model), and I have no issues with my newly acquired game, "F1-2012". It does have some framerate issues though, but that's normal, and sometimes it freezes too, but again, normal for a PS3. Even Uncharted (1) froze on me these days. Yesterday I did a long race in Melbourne, and for three seconds, it got really slow (as I was lapping two slower cars), but got back to normal and I could resume the race.
It's good being a gamer again. I can play anything now, with my new slim, and not "just GT5" anymore, as it was during this past year. xD
So, I hope this information helps you, somehow. You have three options:
1- Have your PS3 checked by a tech;
2- Apply new thermal paste to the GPU;
3- Get a new PS3 (most likely what needs to be done... I don't think a simple thermal paste would solve any issues on an already deteriorated GPU).
