I am not sure if i am doing it right. Please help.
To add simulator, goto > windows > devices
problem:
1) When I tried to add simulator for ip
Is this correct? iphone 4s should be using ios lower than ios 8 right?
It is correct. I have an actual iPhone 4s and it is running iOS 8.3. (In fact, it is my primary development testing device for iOS 8.)
You can install earlier simulators, but there is nothing wrong with what you're seeing.
(And yes, this means that in order to develop for iOS 8, you need to support screen sizes ranging from the tiny iPhone 4s to the massive iPhone 6 Plus. Good luck.)