Just found http://www.virtualbreadboard.net/
The description on the website reads:
VirtualBreadboard is a simulation and development environment for embedded applications that use microcontrollers. It is easy to use and can replace a protoboard for experimenting with new designs.
VBB simulates many of the PIC16 and PIC18 microcontroller devices with now Arduino emulation. In addition a wide variety of simulated components such as LCD’s, Servos, logic and other IO devices that can be used to model and simulate high level circuits.
Video that shows some of the Arduino simulation features: