I tried the demo. The damage is more "real" per se. Yes, you get more than scratches on your car now, but it's still not really realistic. I can hit a pole full speed and it would total the car in real life, I can hit a pole in the game and it just smashes in or takes off the bumper and maybe does something to the fenders. The way to total is to flip the car.
I personally like Test Drive Unlimited and NFSMW better even just trying the demo of Pro Street. I like racing along with just being able to drive around. In TDU you get a lot of space to drive around in...