There are a lot of fun racing games that play great on the Pandora (too much to mention them all). If you compare racing games on Pandora with the ones on the latest consoles or PC then you will be disappointed for sure. Every new console generation improves on graphics and realism. So if you like realistic racing games, the latest popular console that is emulated well on the Pandora will provide the best (PS1). On the PS1, Gran Turismo is my favorite 'realistic' racer.
That said, there are quite a few titles that are still fun if the graphics or lack of realism don't bother you. Stuntcar racer (Atari ST/Amiga) the unique Uniracers -Zero (SNES) and also SNES F-Zero are the games I still like to play.