Some of the cars "look like they are from the 1980's" because they are from that era.
As for straight edges in wheel arches etc, all 3D models are made up from triangles which form polygons. The more triangles (or polys) that a model has the greater the illusion of a curve. Original LFS cars were not extremely high-poly models, obviously to keep resource use down for lower-spec PCs. Recently several of the car models were updated, including more polys in certain areas like wheel arches. While very high poly models are no real trouble to make, many players would complain of low FPS etc. In most 3D games a compromise is made with modelling. Look at Counter-Strike as an example, the player models are very straight-edged ie: they have low polygon counts.