When I try to execute my iPhone application in simulator, I get the dreaded error
Recreating project step-by-step showed that it was directory structure.
I've had directory named 'resources' with resources for my application. That directory was added to the bundle as is (via Folder References feature).
When I renamed that directory to less common name, error went away.
So, never name any custom directories in the bundle 'resources'.
Guys from Xcode (or simulator) team could improve their error reporting. I've had to spend whole day debugging this issue. :-(