It's kind of supposed to look like that, like it had been excavated specifically to make the racetrack. Also, it makes a greater challenge when racing...
Um.. wouldn't it make it harder? I personally would like to see more of a natural looking track (sorta like not so carved into the ground), but that's just me :P
3D Warehouse... :/ I don't have enough skill to make something like that by hand, and if taking a model from the 3D warehouse is unacceptable, I'll take the ship out...