I'm working on an iPhone app and about to release version 2. We'll be changing the core data model and I'd like to simulate the upgrade process in the simulator before releasing it to users and potentially causing data loss for them. There doesn't seem to be any real good doucumentation on how to do this in a sandbox before releasing it.
I agree with Brad's overall approach. To save a little time, I would just save the sample set of data that you create with the older version of your app. This way you won't have to keep recreating the sample data set if things don't go right. You will just simply copy the sample data set back into your app's directory in the Simulator.
Your app's directory is located at ~/Library/Application Support/iPhone Simulator/User/Applications/A GUID for your App on your development machine.