We know very little of fine details like this about GT5 yet, but in previous GT's the AI does upgrade their cars.
Really? I never new that. I didn't seem to find that the AI in GT4 upgraded their car's performence.
They didn't upgrade to match you, they were just randomly tuned (usually fairly mild), which you arn't aware of how much until you race then and realise your car which should be faster (stock for stock) but you can't keep up in the straights.
What i mean by this is, in the Opel Speedster/Vauxhall VX220 one make race, the AI cars were tuned higher. Even with maxed out tuning, a rear wing and R5 tyres, it was still ~120 points per race which basically means they tuned it more than you can.