Simulation for Arduino

The right search in Google turned up these results:

http://www.oshonsoft.com/avr.html
http://webscripts.softpedia.com/script/Scientific-Engineering-Ruby/ATMEL-AVR-Simulator-32950.html
http://www.amctools.com/atmel.htm

http://compilers.cs.ucla.edu/avrora/simulator.html

http://avr.sourceforge.net/

There were a few more, but I guess you'll find something useful there. Also, you can have a look at avrfreaks.net in the Tools section as I'm quite sure some more software will be there.