Update - 5:30PM PST: Alright folks we've made some optimizations to the Multiplayer Hoppers and as of now you should be able to succesfully join populated races. Give it a shot and let us know your experience here.
We're hoping this will solve the majority of issues, however were still looking for the best balance of ping vs. number of connections etc...
We will update if anything else changes. Now go run some races!
From our official FAQ (that everyone should read)
10.28.09 – Optimization of Multiplayer Matchmaking Lobbies Begins.
Today work has begun on optimizing the multiplayer matchmaking lobby experience. Over the next few days you should expect to see changes to the behavior of our multiplayer hoppers. We will post any new updates here with any additional news or information as it becomes available.
So yes we are aware of the problems and are actively working towards improving connectivity between players.
We apologize for the inconvenience and appreciate your patience.
Thanks,

Questions or Issues? Visit the
OFFICIAL FAQ. for answers.
Landin "Game Genie" Williams
Turn 10 Community Lead