Let's compare the GSR and RS tranny. The first two gears are the same.
However, 3rd and 4th gear are about 7% shorter, and 5th gear is 10% shorter ((0.787-0.714)/.714). Let us assume that the final drive is the same for now. In 3rd, 4th, and 5th gears, you will get noticeably improved acceleration. It's almost like having 7% more torque in 3rd and 4th at any given time (it's not quite like this, and I'll get to that in a moment) and 10% more torque in 5th. This comes at the sacrifice of top speed in any given gear. Now, with a 7000 rpm redline, top speed is about 220 km/h rev limited (it's still got lots to go... it literally 'slams' into the limiter) with the GSR tranny. Personally, you don't need to be up that high on the race track. YOU ideally like to increase FD to get even better acceleration at the expense of top speed, which brings us to the next topic: FD.
FD is exactly what it says... the final reduction through the tranny before the driveshafts. It affects all gears. The total reductions for the gears would be the gear ratio multiplied times FD. Thus, if your engine is at 5000 rpm, and you are in 4th gear using a GSR tranny (total reduction of 4.4*1.034=4.55), the driveshafts would be turning at 1100 rpm (the calculated speed using 577 mm as the nominal tire diameter would be 120 km/h, which pretty much corresponds to my speedo). FD increases the overall ratio for all gears without affecting gear spacing. Gear spacing determines how much engine speed drops between shifts. For 2-3,3-4, and 4-5, gear spacing is very good on the GSR tranny. However, from 1-2 the gap is a factor of 0.59. Thus, if you shift at 7000 rpm, you'll end up at about 4100 rpm

. I suspect the reason Honda did this is to give good starting power in 1st gear in a car that doesn't have much low end torque. Anyways, looking at the Type R ratios, one can see that the gap between 1-2 is 1.54, which is much better. The gaps between the other gears remain the same as on the GSR. Honda has basically just moved gears 2-5 'closer' to 1st gear. If we ignore 1st gear, a Type R tranny is essentially a GSR tranny with a 4.7-4.8 FD.
Now back to the issue of why improving a gear by 7% isn't quite the same as getting 7% more torque. When you do this, the top speed in that particular gear will be reduced and thus you'll have to shift sooner. Thus, you'll be spending the 'extra' time that you would have been in the lower gear with the poorer ratios in a higher gear with the better ratios. Even though the better higher gear has better ratios, it still won't be as good as the poorer lower gear. But overall, the effect is improved acceleration and lap times. There is a limit though. Shifting takes time and thus you don't want to have a zillion gears spaced 0.99 apart with an engine with a big SPIKE for it's powerband

. That is why Formula 1 and Indy cars are generally limited to 6-7 gears. In CONTRAST, you could go the other way by using a non-vtec tranny and GSR motor, in hopes of being able to stay in 3rd for a 1/4 mile run. With this particular setup, that may just be the way to go for a 1/4 mile run. However, with 7000 rpm redline, the shorter gearing you can get the better. With the gsr tranny, you'd have to make 4 shifts during your 1/4 mile runs (sometimes you get into 5th), but all are pretty quick and most people definitely get better times due to the gearing.