Proteus

Proteus 7.0 is a Virtual System Modelling (VSM) that combines circuit simulation, animated components and microprocessor models to co-simulate the complete microcontroller based designs.

This is the perfect tool for engineers to test their microcontroller designs before constructing a physical prototype in real time. This program allows users to interact with the design using on-screen indicators and/or LED and LCD displays and, if attached to the PC, switches and buttons.
One of the main components of Proteus 7.0 is the Circuit Simulation -- a product that uses a SPICE3f5 analogue simulator kernel combined with an event-driven digital simulator that allow users to utilize any SPICE model by any manufacturer.
Proteus VSM comes with extensive debugging features, including breakpoints, single stepping and variable display for a neat design prior to hardware prototyping.
In summary, Proteus 7.0 is the program to use when you want to simulate the interaction between software running on a microcontroller and any analog or digital electronic device connected to it.