How much is iPhone Simulator limited?

First post, as you can guess I registered to ask this. Help me out for a sec.

What can the Simulator do? At first look all it can do is run apps you coded, Safari and other 2-3 obligatory apps, but can you run other software with it? If no, can you trick it to run other software?
Before I go and waste $400 on a phone, it's only natural I'll wanna test it a little. Seeing as no one I know owns one this is my only choice. I'm fine with the most humble emulating as long as I can do it.

P.S. If I got it right, you need the Installer app to install stuff? What if you have the actual apps on your computer? Can you somehow open it in SDK and use it to run the app? Given the app is open source?

Um.. anyone?

the iPhone simulator is designed to run the apps you build using the software included in the SDK.

its not a fully fledged iPhone.
best thing to do if you want to fiddle with one is to go into a shop and look at the ones on display.

The aspen simulator will not run installer.app (which is an unofficial 3rd party hack).

It includes Contacts, Safari, Photos & Settings (though only a few of the real settings can be accessed).
It certainly works and reacts just like the real thing, but is limited as mentioned above.
My advice: Go to your nearest Apple Store and give it a try yourself, or watch Apple's online video guides. Or ask iPhone owners here if you have any questions.

(Note: It's great for testing mobileSafari though: Everything works there as expected.)