I have XE7 and want to play about with some ios development prior to forking out for a license. I have XE7 on Windows 7 in VMware, running the latest version of XCode and OSX - and it came with (or got - I don't really understand macs much!) Simulator 8.3. Googling around it seemed 8.1 wasn't supported yet, so doubt 8.3 is - when I compile the app it provisions to the simulator fine but doesn't run - just opens the splashscreen then shuts down again.
I installed Simulator 7.1 on OSX/XTools - but when I try and add the SDK on the "Add a new SDK option, only iPhoneSimulator 8.3 is shown.
XE7 does not work with the iOS 8 simulator. To use a simulator with XE7 you should instead have only XCode 5.1.1 on your Mac. Even though you can install the iOS 7 simulator in the latest XCode, it will not work with XE7 (it has no option to choose what version of the simulator should be run, only the SDK that you compile towards).
However, as Jerry Dodge mention, you must have XE8 to submit to the App Store because the new requirement from Apple is that you must create a universal binary with both 32 bit and 64 bit code inside. Only XE8 can do that, so XE7 can only be used to develop and test anyway.
I had a similar issue and ended up deinstalling the latest XCode version and installing XCode 5.1.1 instead. Then create/reload the SDK libraries using the Delphi Connection Manager. This allowed me to run the IOS 7.1 Simulator.
The SDKs are stored inside the folder
/Applications/Xcode.app/Contents/Developer/Platforms/iPhoneSimulator.platform/Developer. If that doesn't include the iOS 7.1 SDK, then Delphi won't find it either. You may have to ctrl+click the Xcode application package and select "Show Package Contents" in order to see these folders.
You can get the older SDKs by downloading an older version of Xcode from Apple Dev Center. You need to have a developer account. Xcode 6.1 should do the trick. I think you'll need this version anyway if you want to use Delphi XE7.
Apart from that I'd recommend that you upgrade to XE8, because you'll need that for deploying to the iOS App Store. Unless you want to use XE7 just for seeing how iOS development works, it is better to start with XE8 rather than upgrade your project later. That will also help you write your code in a way that it works when compiled as a 64bit application (as required by Apple).