In the actual lore before this game came out, could Sith and Jedi go invisible by just using the force? I thought that stealth belts were really the only way to do such a thing, and the fact that a class uses the force to go invisible seems a bit against the grain of it not being included before. Am I wrong in thinking this?

Juhani was able to in the original knights of the old republic.

Interesting, and thank you! Are there any other instances of this?

Juhani was able to in the original knights of the old republic.

 

Was this due to using force powers, or simply a gadget?

Well in serveral instances Jedi can use Jedi mind tricks to convince you nothing is there in front of you. Maybe this is how it works.

in KOTOR it is mentioned and in KORTOR 2 there are 2 stealth classes. Jedi watchman and sith assasian. It also mentions Ulic Quel drona(killed spelling) mentioned as a jedi watchman

Obi Wan Kenobi uses the force to slip through a military space station completely unnoticed, moving right past Imperial troops dressed in his full Jedi regalia which would have made him stand out like a sore thumb. The game just reflects that sort of interaction by making them appear invisible.

Well Jedi can't go invisible here either. They can go into Stealth which fails if you get too close to an enemy. I can usually see a stealth player about 5 meters away.

http://starwars.wikia.com/wiki/Force_camouflage

 

There you go.

in Dark Forces II: Jedi Knight, as a lightside user you could use force persuasion as a cloak ability.

 

Later in the EU, Lumiya and Jacen use force camouflage quite extensively. Lumiya even goes so far as to follow Jacen into the Jedi Temple, and stand beside him while Luke converses with his nephew completely oblivious to the Sith Lady's presence.