I voted PGR3, but I need to make a few pro/con comparisons to both games:
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TDU: I don't think a game like this really would have been considered a possibility without the full-power of the 360 or a high-end PC on tap. Go back even three years and I think the idea would have been laughed at as a reality at the time, as even Rockstar struggled to create an open-air world with GTA:SA.
What TDU does is combine everything that is held high by so many people; Beautiful island, obsurd ammounts of money, fast cars, hot women, and the feeling that you are free to do whatever you want. The execution of it all really is top-notch, especially when you consider the previous Test Drive titles, and the fact the game retails for only $40.
...The thing I couldn't get over was the island itself. It is absolutely amazing to be driving around it, having other people on XBOX Live around you, and the fact that a 30 minuite drive in real life should take nearly the same ammount of time in the game. The graphics were pretty damn good for a budget title, and although I was unable to enjoy them with an HDTV, I certainly understand how pretty they can be.
But what wrecked the game for me was the gameplay. The physics were essentially broken, the cars themselves completely unrealistic in performance, and the race-types were quite boring. To be completely honest, I had more fun just driving around than actually playing through the game. The whole notion that your car seemed to be hitched to a pole that made it turn left or right really bothered me... Some cars it was worse than others, and to really do some trick driving, it simply required too much effort.
...But $40 for a trip to Hawaii? I think I'm willing to pay for that...
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On the other hand PGR3 does a much better job at keeping me entertained. In some ways PGR3 was the opposite of TDU in a few categories, particularly in gameplay and racing style. In PGR3, everything just seemed "right."
...Of course that may be because I've been playing PGR titles since they first debuted on the XBOX and I quite enjoy the franchise. There is just something about the way the cars handle that is completely realistic and yet completely unpredictable that makes it so much fun. Drive the TVR Sagaris through Las Vegas and you will understand.
On the side of graphics, PGR3 continues to be a driving force and a good case for the power of the 360 despite the fact that it is a first-gen title. The attention to detail not only with the environments, but also the cars themselves is simply stunning. I don't even think GM or Ferrari have CG models that look that good when they design their cars. I love the fact that you can see the exhaust fumes comming out of the tail-pipe and that your window gets dirty as you race in the game. As they say, "Its the little things that count."
However PGR3 loses in one department: Some of the fun from PGR2 dissapeared. Certainly the developers hoped to fix that by adding the Mini Cooper S, but even then, there just aren't enough "free" modes to get it all done right. Onlie works pretty well, but it just doesn't seem to flow as well as what it's predecessor did. I'm also finding that I miss my favorite cities more than anything as Chicago and Washington D.C. were argueably the two best additions to PGR2.
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Overall, the games are quite similar and quite different. If you are a straight-up racing fan you are going to want PGR3, but if you prefer more of the free-roam taste to a racing/driving game, TDU is going to be better.
The good news for TDU is that it is cheap, there is more than enough to do, and updates should keep the game alive. PGR3 on the other hand has been out for a year, has had plenty of updates, and will soon be replaced by PGR4 sometime next year.
...I'll take PGR3 any day, it just suits me better. Not that TDU isn't a good game, it just isn't PGR...