There is no need to include the vast majority of regular 2000-2006 road cars, particularly at the expense of the latest models and classics.
It doesn't work like that. I'm just speculating here, but i'm thinking PD committed themself to keeping all cars in from GT4, as they got so much negative feedback for GT3 because they removed so many great cars from GT2.
If they never planned on doing that, there would be far less than 950-1000 cars in the game, i'd estimate around 600 at best if they removed 'unecessary' and 'obsolete' models and variants. Removing other cars does not necessarily make way for new ones, they're not limited by anything other than time. And considering it takes ~6 months for one person to model one car at the sort of polygon levels we're talking here, i wouldn't be surprised if everyone here is going to be disappointed when the new 09-10 variants of cars from the past few years arn't included because of time restrictions. DLC is a possibility, but repeatedly adding cars simply pushes back the release. As someone said before, there has to be a point where they stop adding cars. And where DLC is concerned, they have to hold something back for GT6 if we want that game within the next 3-4 years, otherwise it'll be on PS4 and we'll have to wait 5+ years all over again.
I'd say the vast majority of the cars are modelled and ready for GT5. Infact the game is probably pretty much complete. I'd very much doubt we see more than 10 cars from 2010 onwards (excluding concepts).
Basically they can't win. They put more than double the cars in the game as the closest competitor, and people complain about the unnecessary cars and the variants. If they removed the variants and unnecessary models in favour of new models and classic race cars etc. There would be complaints that X cars from GT4 weren't in GT5. If they keep all the cars from GT4/PSP and add lots of classic models and new models that we havn't seen in GT before, there will still be complaints that X car wasn't included, or "I want the new corvette variant with 15 extra bhp" etc. Which will lead to calls for DLC. Which will push back the release for GT6... Either that or people will start calling it GT5.5 because of again the lack of new models. (Although having said that, GT6 is probably just going to be a slightly improved GT5 with Porsche added...

Don't quote me on that though)