When the PlayStation2 was announced, the first title Sony officially mentioned for the system was Gran Turismo 3. If you have played Gran Turismo 2, then you already know what to expect from the gameplay, since GT3 is basically an enhanced version of it at this point.
Graphically, Gran Turismo 3 is turning out to be stunning. In the latest playable version, high-resolution textures are starting to be implemented, but some areas still need work (for example, the crowds). The smoke effects caused by skidding now appear to be finished, and they add a nice sense of realism to the game. Lighting in the game is also coming along real nice. Shadows caused by buildings blocking the sunlight (which is a nice effect in itself) allow for a completely different driving experience, compared with Gran Turismo 3. As you move in and out of the sunlight's path as you race by buildings, your eyes are forced to quickly adjust to the lighting - just as in real life driving - making the game more difficult.
The replays in the game are unlike anything ever seen before. It's breathtaking to see the heat rising off the road as a pack of cars comes from the edge of the horizon and zooms past you. As for the physics, what you found in Gran Turismo 2 is basically what you find in Gran Turismo 3. If there is any difference to be mentioned, the cars appear to be a bit more "springy."
Of particular note is that the game will benefit from the Dual Shock 2's analog-sensitive buttons. Take acceleration, for example: The harder you press the gas button, the faster the car will go similar to the way a real gas pedal behaves, or like the shoulder buttons on Namco's neGcon controller. Needless to say, this is extremely cool, especially considering the fact that the buttons don't feel any different to the touch from the buttons on the standard Dual Shock controller.
Sony has said that Gran Turismo 3 won't just be a graphically improved version of GT2, so it will be interesting to see what the company adds to the game before it's released to make good on that statement.