rFactor has better Netcode, better sounds, and it is opened for modding, which can be good or not.
After 2 or 3 years, good mods started to come, and now, great works such as Historic GT and Real Feel has given a new level to this simulator.
ISI is a team that, like LFS team, usually do participate in foruns and give answers to the crowd.
Some features of rFactor are just a matter of taste, but for me, a few canned effects, are welcome, such as cockpit's vibration.
LFS has better (much better) FFB, better online experience (not due the netcode, but the resources, like changing cars, inside the same session), and the closed code can be seen as an advantage under some aspects.
I think both are great works, and both has lessons to teach, and the perfect world would be a joining of the best features of each one, and other sims too.
I have a large HD, so I can afford with both and the other good sims in the market (iRacing, NKP and Simbin titles).