I'll start by saying that I have never played this or Forza 2 online. My online experience is limited to Call of Duty. If you're looking for a review of the controversial multiplayer mode, there are plenty of good ones from other gamers.
That said, in single player mode this game is amazing. Not perfect, but very, very good. I absolutely loved Forza 2, so I was concerned that Turn 10 might alter the new game in ways that would be frustrating. Well, they did...but they made up for it (mostly) with lots of great new features. I am a hard-core driving simulator enthusiast; except on the most frustrating factory stock races, I play everything with the AI difficulty on "hard," stability control off, and manual transmission mode. Despite this, Turn 10 has provided options to make the game EVEN HARDER or considerably easier. In fact, this is one of the biggest new feature sets, which allows a player with just about any level of experience to set the game up to their liking. While I won't use things like "autobraking" or the recommended racing line, I don't have to.
Of course, Forza is all about cars, and Forza 3 delivers tons of them. Counting the DLC, which keeps coming out, there are well over 400. Chances are, unless you are a huge fan of Japanese "kei" cars or obscure pre-war European roadsters from long-disbanded manufacturers, you will find your favorite automobile in this game. (Gran Turismo should cover you in the cases I mentioned).
Forza 3 also improves upon Forza 2 with its selection of tracks. The classics are still here (including my favorite Maple Valley) and with lots of new details thanks to the improved graphics, but new tracks debut as well, including the beautiful and extensive Amalfi Coast and the fictional series of Spanish tracks billed as "Camino Viejo de Montserrat." Additionally, the gorgeous Fujimi Kaido from Forza 1 makes a reappearance.
Forza 2 had tons of customization, and Forza 3 has even more. While everything is just about the same, there are a few new things you can do such as adding oil coolers. On the other hand, it has also been simplified a bit; you can't choose what brand of tires you install, for example.
Gameplay is just as good as before, with an improved physics engine that allows rollovers. The graphics are phenomenal, each car is exquisitely detailed, and there is a full cockpit view from which you can drive. If you are an extreme hard-core racer, you can even choose to drive with a button for the clutch. This is beyond me because in real life I use feet to operate the gas, brake, and clutch while my hands can concentrate on steering and shifting. Doing it all with my hands is too confusing.
Now, the negatives. No game is perfect, and Forza 3 has its share of flaws. The first thing that annoyed me was the "race announcer." He won't shut up. His bass-rich, nostalgic easy-listening voice can be heard any time you try to enter a car into a race for which it doesn't qualify (which I often do in order to quickly see which ones I own that DO qualify).
Another big problem is the acquisition of cars. In Forza 2, you got cars for leveling up via XP, and you received a car for each race series you won. In Forza 3, you do get cars for leveling up, but you stop leveling up about 1/4 of the way through the game; meanwhile, winning race series only gives you money...not enough money. I decided that I wanted to own all the cars in the game, since I did pay real money for this opportunity to virtually drive them, and so with 3/4 of the races completed, I tallied up the cars remaining and found I still needed $110,000,000 to buy them all. Considering that a typical, mid-length race at my advanced level of difficulty only nets about $18,000, that was going to take a while. Part of this is due to a single vintage Ferrari priced at $20,000,000. The cars are just too expensive. It's my own fault for wanting them all, but hey, I should be able to do that.
In their attempt to make the game appeal to a wider range of players, Turn 10 also added some unnecessary drama. There is an entirely repetitive animation at the beginning of each race depicting your car rolling up to the line and revving its engine. While they do stick to realism here (old cars with soft suspension will bounce when they stop at the line), the revving is tacky, and more critically, it removes your opportunity to bring your RPMs to the correct level for a good launch. A successful launch off the line is often the key to getting ahead of rivals who may be hard to pass elsewhere. Forza 3 made this impossible, which is extremely ridiculous considering that an all-new race type is drag racing. The launch is the MOST critical part of a drag race!!
The rewind feature has drawn some criticism from die-hard gamers, but I think it's good. You really don't have to use it, but I certainly have. It's easier than restarting a race (which takes a long while) and in long, tedious races it can save you a ton of headaches. However, it doesn't always work. Seriously. Sometimes, when you need it most, it just isn't an option. The most notable time for me was in the third-to-last lap of an endurance race. At the end of the long straight, I got incredibly distracted by something else (perhaps my own thoughts) and failed to brake. Instead of immediately braking and swerving when I realized this, I moved my hand so that I could hit the rewind button. It did nothing, and by the time I figured that out and got back to the brakes, my car had covered the sand beyond the track and smacked the wall, wrecking its front. Fortunately, the engine was OK, and I still won the race, but it's good to know you can't always rely on the rewind button.
The addition of lousy in-game music is simply a waste of disc space (which is an issue, since you have to install almost 2GB of data on your hard drive in order to play all of the game).
Overall, Forza 3 makes some great improvements (rollovers, more cars, awesome graphics, new tracks) over its predecessor, but it is not perfect. However, it does allow novice and experienced racers alike to jump in and play, and completing the game will take hundreds of hours, making it just as much of a total immersive long-haul experience as its prior installments.