8052.com has an 8052 IDE with simulator!

the sim is available standalone at a cheaper price.

http://8052.com/store/?PRODUCTID=2

Pinnacle-52 IDE

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SIMULATOR FEATURES: Supports all MCS-51 Instructions; Simulates I2C bus and communication with I2C devices; Single step operation for easy-debugging; Procedure step operation for quickly executing subroutines; Optional break after X NOP instructions are executed; Immediately notified of attempts to access invalid SFRs; Disassembly window allows viewing of entire program as simulator runs; All SFRs Internal RAM, External RAM, bits, and ports may be viewied and modified manually by the user; Terminal Window in Simulator displays all data sent by program to the serial port, and allows user to type terminal data as input; Optionally, user may use PC serial port as the serial input/output port for the Simulator allowing connection to real-world devices; Interrupt register protection notifies user if an interrupt routine does not properly protect critical registers; Subroutine return protection notifies the user if the program doesn't return from a subroutine to the instruction that called it.