I've read somewhere that: It is torque, that wins the race. Not horsepower.
Actually, both things are pretty important. Torque is the amount of force that the engine puts on the wheels, so it's important when you are geting out of a corner, or when you are overtaking somebody. The more torque you have, theoretically, more acceleration (of course, tons of torque are useless with hard tires, slippery road and whatnot). Pure horsepower have more effect on the top speed that you can achieve in each gear, so both are pretty decisive.
Torque is more relevant in short courses. That's why short gears are optimal in small tracks, since you are getting more acceleration, and less top speed.
HP is the key to fast courses with long straights, and that's why longer gears are the thing to deal with such tracks, since you are getting more top speed.
(at least, this is how I understand it).
What torque? Or should I just focus on the HP graph?
HP. The point where the line starts to drop is the optimal output of your car in that gear ratio. Take note of the RPM when this occurs and this is the shift up point.
EDIT: Actually, just before that point. If you hit that RPM mark you'll hit the limit and you'll get that nasty dropoff.