Might just add my little info to this thread aswell....:
From an interview with Yamauchi, the genious behind the GT series, we found out that GT4 will most likely use the HDD to speed up loading times and play a central role in downloading content for the game (i.e. cars maybe?).
He also commented on the issue of adding damage to the game. He said, he hopes to implement it but as of yet, no one is sure because the car manufacturers just won\'t allow it. He did say that GM and a few others already gave him an OK for damage in GT4, but at the end, a few won\'t be enough. He did say though, that it\'s a possibility that Rally mode might have real-time damage included while other game mods might lock the feature out.