It is difficult to overstate the importance of two key factors in racing simulations: the vehicle dynamics engine and the support of 3D video cards, in order to get a good frame rate with good graphics detail.
For more information about frame rate and other factors affecting racing sim performance, see my article entitled The Racing Platform.
Also see my Technical Requirements page.
The new generation of 3D cards is fast enough to provide awesome detail at acceptable frame rates, but the performance penalty imposed by Windows 95's Direct3D interface to these cards has a serious impact on frame rate. For now, unless Direct3D gets more efficient, the best solution for Windows 95-based racing sims seems to be the use of proprietary APIs directed at specific video cards.
In late 1997, Ubi Soft released the superb F1RS, which is just now beginning to trickle into the US. Although its Direct3D implementation is less than fully successful, this Windows-based sim shows the stunning graphics possible with silky-smooth frame rate when using the proprietary Glide API and a 3Dfx Voodoo Graphics video card on a Pentium 200 class machine.
In November, 1997, Software Allies showed that Windows 95 can support a well-designed racing sim, with their excellent SODA Off-Road Racing. Because its proprietary API is for the slower Rendition chipset, SODA's frame rate suffers from the performance penalties imposed by Windows 95. However, it is still quite acceptable on a Pentium 200 with Rendition card.
DOS is no longer the only platform of choice for serious sim racers, though it is still necessary for good frame rate performance in the best available CART sim, Papyrus CART Racing.
Getting the vehicle dynamics engine really right, with correct behavior of the cars at the limit, and without obvious cheats like canned spin algorithms, is a huge challenge. In a good racing sim, the car's behavior should closely model the behavior of real cars. For example, when you trail off the brake as you are turning into a corner, the weight transfer to the front wheels should make the car tend to rotate more readily towards the apex. There are many other behaviors of real cars which seperate the good sims from the also-rans.
If you have experience with driving real cars at the limit, you are likely to notice the difference in a good sim right away. Driving a sim with really good vehicle dynamics can be an immensely rewarding experience.
I feel that all of the recent sims from Papyrus accomplish the goal of providing accurate vehicle dynamics, as does the new Formula 1 sim from Ubi Soft. SODA's vehicle dynamics engine is also excellent.
Rumors about Papyrus' upcoming Grand Prix Legends suggest that this new sim will set a new standard for vehicle dynamics in racing sims upon its release. I can't wait!
A third important consideration is the type of racing that appeals to you. For example, while I think NASCAR 2 is an excellent sim, it's not my favorite because I don't like driving big, heavy, lumbering stock cars, and I find racing on long ovals gets tedious very quickly.
I prefer cars which are lighter and more responsive, which is why I enjoy F1RS and Papyrus CART Racing so much. On the other hand, I like driving sideways, so I also enjoy SODA.
If you choose a sim which models cars which you would like to drive, you're more likely to enjoy the sim.
Another important consideration for you may be whether you want to race against other sim racers. All good sims have computer-driven opponents you can race against, driven by Artificial Intelligence modules in the game engine. While this can be great fun, for many people (myself included) there is nothing like racing against other humans.
Racing sims until recently provided at best two-player racing via null modem or telephone modem. NASCAR 2 was the first sim to allow racing between more than two human opponents, via an IPX LAN or the Internet. F1RS and SODA also incorporate this capability. Although there are some warts in the current implementations, there is nothing like racing against other real live humans! As this relatively new technology evolves, and the implementations become more polished, I expect online racing to become a major factor in the sim racing world.