This folder exists.
I've tried moving it to the trash (it reappears and then this message pops up).
I've reset all permission to all enclosed folders to R+W.
I've repaired permissions on my drive.
Plugging in a real phone works fine (probably not relevant).
Turns out the actual folder for the log file didn't exist.
When looking in Console.app, filtering on CoreSimulator, I saw this:
3/15/15 9:50:52.840 AM iOS Simulator[7291]: Error opening /Users//Library/Logs/CoreSimulator/iOS Simulator.log
When I went to the Logs directory, CoreSimulator wasn't there, so I:
sudo mkdir CoreSimulator
sudo chown <user>:staff CoreSimulator
touch CoreSimulator/iOS\ Simulator.log