I don't doubt that these guys are skilled and fully deserve their lap times and haven't cheated.
I do think, however, that it's something that should be tweaked in the sequel (or the one after that if we're too late) so that set-ups that would make Monaco undriveable in the real world do the same in the virtual. Otherwise it makes set-ups a little pointless.
It should be very, very difficult to beat the real life times (these are the best drivers in the world after all) so people doing 1:09s is not terribly realistic (I stress this is not their fault).
I'm all for peope beating the real times, but it should be by hundreds, tenths or maybe even 1 or 2 seconds but not 5. Otherwise the physics engine isn't doing it's job properly.
Until this happens very well done for all those guys and gals out there getting these times, you are darn quick!!! I agree with Ammba on this bit, you should get yourself in to a Karting team and be the next Ayrton.