And yes, 'arcade' frequently means 'dumbed down' in terms of the physics involved. However, a couple other drivers and I have done some comparisons and it appears that the beahviour is identical in both cases.
To test this theory I used the Prius on both arcade and GT mode at the nurb with stock settings and performed the same no magic handling or easy driving in both modes.
Thanks guys, that's great to know. It's just that I love the Ring so much I spend too much time in arcade mode driving different cars on it I have "the Ring worm" as Jeremy Clarkson put in in Top Gear