Theres 3 outcomes of the whole simulation debate.
1. Player takes a dive, no contact. Book him. Simple. This needs to be done more.
2. Player legitimately gets fouled. Give the free. Duh.

And this is the troublesome one.
3. Player dives after receiving minimal contact.
This has the argument that the player is trying to trick the referee into believing there was a foul by simulating, exaggerating etc. BUT, can the referee be justified in handing him a Yellow for simulation if there was actual contact. The other side, can the referee ignore the simulation, and ignore the minimal contact as it was not enough to warrant a free kick? This is the grey area imo.