I have mostly worked in the iPhone Simulator, but in this case you will miss
out on testing some of the device's resource limitations. I have had issues
both with a native application and a mobile web app where I had smooth
sailing in the simulator but then had crashes due to memory limitations on
the actual device. Also, I have run into some things (maps) which run great
in the simulator, but are crap on the device. While the simulator is still
hugely useful and does allow you to fake an out of memory call, it's
definitely not complete (in this case).
Actually, I bet this is a Simulator vs. Emulator issue. I see that the Palm
webOS Emulator runs in a virtual machine, and I am able to get some slow map
performance out of it. If it supported multi-touch and rotation, it would
probably be a great testing environment. For now, I'll just keep an iPod
Touch on my desk.