Forza 3 is what we use to race 914s though it has been a while since we have had any organized racing online. If you get Forza 3, get the Platinum Edition that includes all the past DLC (downloadable content) - cars and tracks.
As far as a wheel, the Microsoft wheel may be the easiest to find though I think it has been discontinued. If you can find a Logitech DriveFX for the Xbox 360, that is a good wheel also. Not sure about the Mad Catz and other lesser brands. There is also a Porsche design wheel out that is quite expensive.
Another fun game for general driving is Midnight Club LA.