Yes, local notifications work with the simulator. However, make sure you are implementing application:didreceiveLocalNotification in your app delegate if you want to see the nofication while your app is in the foreground (source)
further troubleshooting steps per our conversation in chat and based on the above.
Like i said there are only 2 possibilities of why its not working. placement (in app delegate vs another class) and the application variable. so if it works in the app delegate then im not sure how to resolve that other then making a public method that you can reach from the class you want the notification to come from. probably not the most elegant or proper way but i dont know what else to say.
If its the application variable then make sure you use the same one i posted, application from the applicationfinishloading arguments list vs [[shared application]