GT4's AI was much worse than GT5P. They always kept to their line and rammed you whenever you were in their way. AI was also much slower getting on the throttle after corners besides making many other stupid mistakes (like not pitting when they should at the nurburgring and then being unable to control their cars).
From what I've noticed so far, AI in GT5P is still slower than you through the corners and they also don't seem to slipstream. On the other hand they swerve to avoid you many - I'd say most times - and usually only ram the back of you car if you break too early.
As for the penalty system, well, sure in GT4 was very unfair but it didn't play a major role in that game - and in Arcade you could always turn it off.
In GT5 Prologue it still needs a lot of improvement but I can't see it as something too annoying. It makes the game harder but that is a good thing IMHO, and as someone said you can always learn and predict what their going to do next. The worst part is online, surely, and it'll have to be improved in the near future. Maybe it's just me, but I find it a lot easier to "forgive" a machine than a person!
RUI