I've played a fair share of racing games from the arcade (Mario Kart, Trackmania), to sim (F1 games) and ones in between like DIRT/GRID and Gran Turismo.
Maybe I have a broad taste of games, but I enjoy them all, but it depends on my patience level at time of playing. There's no way for me to play a F1 game for example if I want a quick blast and need to relax, for that I'd play an arcade orientated game.
That said, my absolute favourite racing game is Flatout 2. Whilst it's probably closer to arcade than simulation, the game itself is very technical and fun. The driving model the developer, BugBear, employed is in my opinion perfect, as you get a real sense of driving without it turning into a chore. Different cars actually behave and very feel different, something other racing games don't really achieve. Also coupled with the wide range of tracks in the game and amazing multiplayer, it's the reason why I still play the game to this day.
I hate the Codemaster's driving model that they've used and still use since way back when, where the car turns from it's centre and basically doesn't handle like a car. This is a shame as GRID would, for me, be a much better game if it wasn't for the appalling driving model.