Which car upgrades are most helpful at the beginning? Are there any that should be ignored, or are even counterproductive to the performance of your car?
Most upgrades come have 3 or 4 different levels, which successively become more expensive and perform their respective task "better". In nearly all cases, you always want to directly purchase the highest level/most expensive part, unless you absolutely can't afford it. The cost difference is usually negligible, for example a level 3 Muffler only costs 3300 Cr more than the level 1 one (in GT3). There is no reason to waste credits on the level 1 and 2 upgrades, since they aren't incremental und further upgrades won't be cheaper.
The only exceptions are Turbo and NA tuning. Their highest level isn't even available for all cars, and the level 3 upgrades are significantly more expensive (over 65000 Cr!) than the level 2 enhancement. Unless you are swimming in money, it is better to get the best bang for the buck and only purchase level 2.
Another downside is that both high NA and Turbo upgrades provide a huge HP boost, which can make normal street cars, especially lower tiers, very difficult to drive due to the excessive amount of wheelspin they produce. You can't transform your stock Renault Clio into a full-blown endurance racing machine. Even if it could keep up HP-wise and is fully upgraded, specifically built racing cars will still perform better.
That said, racing cars you buy or win will already have most upgrades installed or are unavailable. Usually Turbo and NA upgrades are the only possibility for them.
Weight upgrades are a special case, you always need to purchase the previous level to upgrade to the next. The level 3 upgrade is pretty expensive and reduces the weight only marginally. Unless you have too much money, this upgrade can wait.
In the beginning, when money is scarce, one should concentrate on upgrades that are cheap and provide a reasonable performance enhancement for their price. The first upgrades should be:
- Muffler/Exhaust Level 3: A cheap upgrade that gives a good amount of HP for the beginning.
- Sport/Racing Brakes: There is only one level available, but these are essential. More power requires also stronger brakes. The shorter your stopping distance is, the less time you lose in corners.
- Racing Chip: Very cheap, but provides a bit more engine power.
- Port Polish: One-time, permanent (non-removable) upgrade. Adds some HP for a low price.
- Weight Reduction Level 1: Reducing the weight of your car is beneficial in all areas, and the first level is cheap and provides the highest reduction.
- Sport Tires: Provide more grip than normal tires, especially in the first races. Not necessary later where racing tires are needed and you can afford them.
Further upgrading and tuning
The next steps should be level 3 transmission and suspension. These are a bit more expensive, but if you plan to use your car a little longer, these are must buys. They unlock the tuning options for changing gear ratios and various suspension settings, which are vital for more difficult races.
Gear ratios can be changed for better acceleration/less top speed or less acceleration/more top speed. You don't want to run out on gears and hit the limiter while you're halfway through a high-speed straight (Motegi Oval, Test Course etc.). Likewise you don't need super high top speed on tight city courses with a lot of corners and few straights (such as Côte d'Azur/Monaco).
With suspension tuning you can for example lower your ride height, which is one of the easier ways to reduce drag, or camber settings, which can improve cornering when used in moderation.
Then you should consider buying engine upgrades. Turbo and NA upgrades are in most (all?) cases mutually exclusive, you can't put both of them in your car and their availability depends on the aspiration of the car's engine. Level 2 for both is sufficient, they provide a huge HP boost and improve both acceleration and top speed. For low-power cars with Turbo, it should be noted that upgrading the Turbo can make the car perform rather different. A Turbo needs high torque/RPM to work efficiently, so if your car is generally underpowered, a Turbo may not bring the improvement you think it would.
- Racing Intercooler Level 2: For Turbo cars, is cheap and adds a good amount of HP.
- Carbon Driveshaft: Cheap as well, improves the acceleration of the car
- Clutch Level 3 (Triple Clutch): Cheap, improves gear shifting time and acceleration in conjunction with:
- Flywheel Level 3 (Racing Flywheel)
- Weight Reduction Level 2: Further reduces the car's weight, more expensive and fewer reduction than Level 1 but still justifiable to buy
There are some other upgrades, which provide a rather bad price/usage ratio or are only applicable for special cases:
- Engine Balancing: Relatively expensive for the low amount of additional HP
- Weight Reduction Level 3: Expensive and reduces the weight only marginally
- Nitro: Provides additional speed on demand while racing, I honestly haven't used it much to write something intelligent about it.
- Increase Rigidity (GT 4 only) - Makes the chassis of the car "stiffer" and less susceptible for bending. Helps on used cars and if you plan to drive very long time with a production-grade car.
- Variable Center Differential (VCD): 4WD cars only, can be used to change the power distribution between front and back wheels. Helpful if the car is used for both circuit (to give more power to the rear) and rally racing (to get the most from the 4WD).
- Brake Balance Controller: Can be used to change the braking power on the front/back brakes. If you have a higher braking power on the back wheels, the car will oversteer under breaking which can help cornering a bit.
- Displacement Up: Can only be used on Nissan Skylines(?), improves HP and torque.
Tires are less of an issue in the beginning, but get more important in races with tyre wear enabled.
In most cases, Normal and Simulation tyres for racing purposes can be ignored. Go for Sport tyres in the beginning.
Dirt/Snow tires are only used in Rally and "Special Condition" races.
Racing tires are generally better in later and longer races. They come in different versions, from Super Hard/Super Slick (low grip, long endurance) to Super Soft (high grip, low endurance). The harder a tyre is, the longer it will take him to warm up. The tyre wear (if enabled) is displayed in the lower left corner of the screen while racing. Blue means cold tires (=lower grip), they heat up to green (optimal grip, good condition) and wear down to orange and red (low/no grip, bad condition, should be replaced).
Selection of tires depend on the race length, track, car and driving style. You want to pit as few times as possible, and finish short races (<= ~5 laps) without a stop. You have to experiment a bit and watch how fast the tires deteriorate. However very soft tires can usually only be used for a quick qualification lap. From my personal experience, endurance races should be run with Super Hard tires, shorter sprint races can be run with Hard or Medium-Hard tires. If the AI pits in a shorter race, you can either select a softer compound and benefit from the better grip, but lose the same time as the AI while pitting, or use a harder compound with no need to pit. In that case, even if the AI is initially faster, you can still overtake them while they are in the pits.
Remember that you can fit different tires on the front and back wheels. If your car wears the back tires more than the front ones, you can fit a softer compound on the front wheels.