Okay, not completely free, but Ansca Mobile just did something huge — they removed the 30-day limit on the trial version of Corona SDK. That means you can take as long as you want to play with it before actually paying.
You could create an entire game using the simulator and then when it’s done and ready to be submitted to the App Store, pay your money and do a build for your device.
If you haven’t looked at Corona SDK yet and want to create iPhone/iPad/Android games, do yourself a big favor and download it today.
And, to make your development even better, try Corona Project Manager — it works fully even with the trial version of Corona SDK.