If you want to test location and accelerometer events you will need to use an actual device. Also, the simulator does not place constraints on memory and processor usage so you will need to test on a physical device to make sure that you are not going to go over memory and crash or make an app that is so slow it's not usable.

The sim is good as far as getting your app going but if you do anything out side of a basic app, anything graphic or animation intensive. You have to use the device. The sim uses the same processor that it is run on which is way more powerful than an iPhone.