OldAg,
I used to think it was great practice too. That is until I started instructing and saw every student pilot under the age of 30 not take their eyes off of the instruments. I get a sick satisfaction out of the looks they give me when I cover the instruments and make them fly with their eyes outside like they should as a private pilot. It's great for some procedures and instrument stuff (lots of great practice on holds and ILS approaches in various conditions) but for flows and checklists nothing beats the real thing. There are too many things like the layout, and avionics that aren't the exact replica on FS. I still encourage my students to do exactly what HSLD did way back when, sit in the plane and imagine they're doing the real thing.