Does playing racing games with a wheel and pedals affect your real-world driving

The answer to your question really depends on a number of factors:

• Do you approach it as a "game" or a "sim"? I.e. what level of realism do you want? For a realistic experience, you just can't beat a wheel and pedals.
• What kind of controller do you use? A cheap plastic wheel with bungie cord springs isn't going to give you the same level of enjoyment and realism as a high-quality wheel. However, you can pay a lot of money for dedicated controllers that will end up seeing relatively little use.
• Does the game support multiple analog inputs, and/or allow you to map the inputs according to your play style? Regardless of controller, in many games it is important to be able to feather the throttle, etc. I really hate the games that only give you a couple of preset controller mappings, since they almost never match what I want.

For myself, I have used the following:

• Joystick
• Home-built wheel/pedals (can't use it anymore because my computer no longer has a game port)
• Act Labs Force RS wheel/pedals/shifter (with "pro" pedals)
• Multiple gamepads and console controllers

Of these, I still use the Act Labs whenever I want to do "serious" racing but the gamepad is sufficient for arcade racers. I've played all the way through NFS: Underground with the wheel and a gamepad, and wouldn't say it was significantly better one way or the other.

Background/disclaimer: for a number of years I was deeply involved in the racing simulation scene, including an extended stint as the webmaster of Sim Racing Connection where I also maintained the track/addon lists for GPL, DTR and SCGT. I've played just about every racing sim/game ever made, all the way from Grand Prix Legends to Mario Kart. :)

One of the things I liked most about some of the Gran Turismo games is that they let you use both Playstation analog sticks (the left to steer, and the right for forward and reverse acceleration). I'm not sure if the games you're playing have an option for that, but I'd try it and practice that way for a bit. I find that it not only centers your hands better on the controller (i.e. your right hand isn't moving the left stick when you hit the accelerate button a bit too hard), but that acceleration and braking are much, much smoother.

It might not be the same problem, but most of my turning problems were solved by smoother acceleration and braking into the turns, not by the actual steering itself. Give it a shot if you have the option.

Other than that suggestion, try to practice not tapping the sticks so much, but keeping pressure on them at all times. When you start to initiate a turn, give yourself enough time to decelerate and gradually and smoothly steer toward the straightest exit through the curve rather than hammering the stick at the last second. Knowing the course really helps here, since your hands will start to remember what they're supposed to do at any given point.

I suppose that's pretty general, but I hope there's something useful in there for ya.