Setting Xcode's target to iPhone NOT iPad

You can't really launch an iPhone app in 3.2.x - sometimes it will pop up - but basically right now it is only for iPad development.

Update for release version of Simulator.

First of all, the title of this question doesn't match the description: Xcode target isn't the same as the simulator hardware device.

If you are writing an app targeting 3.2, it can run on both iPad (using OS 3.2) and lower OS versions on the iPhone. You do this by setting the Base SDK to iPhone Device 3.2, the Targeted Device Family to iPhone/iPad, and the iPhone OS Deployment Target to 3.1 (lower than 3.2).

The iPhone simulator has a menu option for Hardware->Device, which can be set to iPhone or iPad. However, you can only run a 3.2 SDK target in iPad mode, and a Universal app that supports iPad can only use the 3.2 SDK to build.

You can of course set the simulator to iPhone mode and launch your app from Springboard, but that will lose the debugger connection. Switching mode during installation of your app will cause it to crash.

So the short answer is still the same: you can't run a Universal iPad app in the iPhone mode simulator while debugging.

Upper-left corner of the IDE find a dropdown list of Simulator versions - flipped to 3.2 - try to put it back to 3.1.3

and relaunch your app.