Due to other issues I was having in my project I decided to upgrade my xcode to XCode 3.2.4 iOS SDK 4.1. Now I no longer have the option to pick simulator but instead when I choose 'Device' it deploys to the Simulator!!!
Under 'Project Settings I can select 'Base SDK' as either device or simulator.
I tried uninstalling XCode full and re-installing but to no avail.
How can I get both deployment options back in and working correctly?
Probably something in the Project Settings isn't right. For each SDK upgrade, you'll have to at a minimum reset the "Base SDK", and usually fix one or two other things. For the 4.1 update, I had to remove some OS Minimum settings from the SDKs I use. The compiler command line had two -D__IPHONE_OS_VERSION_MIN_REQUIRED=... with different values that was causing the compile to fail.
Compare a new project's settings with your current project's settings.