No, there is the understanding that the simulator exposes everything about the iPad that the developer can control. They don't have access to the hardware for development purposes any more than PHP developers have access to the hardware. You're dealing with a high-level programming environment substantially more restricted than XCode on a Mac.
You obviously know nothing of which you speak. PHP is a scripted language, interpreted in realtime - you are correct, the programmer has little to test on hardware in that situation. But we are programming in pure C++/Objective C/Assembly, our code natively runs directly on the hardware, controlling it. We are not allowed to directly touch hardware features like the screen or camera, true, we have to access those through Apple's libraries, but that doesn't mean much at all - programming a 3D game in OpenGL on the iPhone is just like programming a 3D game in OpenGL in Windows or on a Mac (except that it's actually OpenGL ES, which is optimized for embedded devices).
Here's an example of why testing on actual hardware is important, and many apps just can't be released without it. Imagine you were programming a simple air-hocky game - just a single puck flying back and forth, each player hitting it with a paddle on their side of the board, controlled by their finger. First of all, that is *impossible* to test on the simulator alone - on the iPhone simulator, there is no way to simulate more than one touch, except in a specific case testing pinches (and even if you could, that would be playing it with two mice, quite the different experience from your fingers on the screen). So you'll never know if your game is actually fun to play for two players, or needs control sensitivity tweaked (like how fast the player's paddles are allowed to move), puck speed/angles adjusted, things like that.
And more important, the speed of the puck flying back and forth - without actual hardware, it's impossible to determine how fast to program the puck to move. The hardware speed is completely different from the simulator, without hardware there's no way to tell if you've programmed your puck to go too fast to even be followed by the player's eyes, or so slow that the game is incredibly boring. And maybe you're using this super-awesome puck and paddles each using 5000 polygons, on a 10,000 polygon table - can the iPad render those at full framerate? Maybe you need to optimize things a bit? Without hardware to test on, who knows? The Simulator does 3D at the speed that your Mac can render the 3D, emulating OpenGL ES.
Or, if you've got a snazzy animation that plays when a goal is scored, that requires precise timing of a sound effect, you need to know exactly how long that effect will be on the screen for it to be perfect. Timing of anything is impossible on the simulator, you need hardware for that.