AVR Simulator IDE supports most of the microcontroller models
used on the Arduino boards, like ATmega328P for the Arduino Uno board.
So, OshonSoft AVR Simulator IDE with its integrated Basic Compiler
could be successfully used with Arduino systems.
AVR Simulator IDE can be used to simulate the HEX files
of your programs written with Arduino software.
The Select Microcontroller dialog in the Device Info Panel
will show you the list of simulated peripherals for the selected
device in the current software release.
Also, AVR Simulator IDE features powerful Basic Compiler
that can be used as an alternative tool to the Arduino software
for writing programs for your Arduino boards.
For that purpose be sure to check out the AVR Simulator IDE
Basic Compiler Reference Manual
There is a development plan for the AVR Simulator IDE to become more 'Arduino friendly' in the future releases of the software.