A friend asked me what I thought made an effective simulation. After thinking it over, my advice was to incorporate simulations that paralleled real world interactions.
Let me explain a little. Simulations need to fit the curriculum and end goals for both instructor and student. So, provided that the discipline and skills targeted fit into the simulation environment I believe it is quite appropriate to create an interactive environment for students to learn while they play and explore. A host of programs, think Captivate, allow you to use high quality graphics and animations to mimic whatever it is that you would like simulated.
Why do I think the best animations mimic interactions? Simply because the learner can easily see how they apply. Think of them as a detailed walk through that can be started, stopped, and restarted on demand.