Usually cockpit view or sometimes bumper view, they are the most realistic. I don't do 3rd person view because you don't drive in 3rd person view, lol. I just think its totally awesome simulating what it would be like driving behind the wheel of the fastest cars in the world. Yeah the graphics are a little low-res on some parts of the interior, but you should be paying attention to the road when your racing, not the interior (except for the dash).
fyi in forza 3, if you want the mirrors to show up in cockpit view, you can enable multiscreen mode and set the FOV. however you're unable to look left/right at an angle when you do this. all the way left/right still works