Hrm.

I just made a test iOS app with no modifications, and ran ...

```
xcodebuild -project TestWhat.xcodeproj -scheme TestWhat -sdk iphonesimulator test
```

It auto-started the "iPhone Retina (3.5-inch)" simulator.  (Even though the last simulator used was "iPhone").

Also, I tried...

```
$ xcodebuild -project TestWhat.xcodeproj -scheme TestWhat -sdk iphonesimulator test -destination "name=iPhone"
Build settings from command line:
    SDKROOT = iphonesimulator7.1

xcodebuild: error: The run destination iPhone is not valid for Testing the scheme 'TestWhat'.
	The scheme 'TestWhat' contains no buildables that can be built for the SDKs supported by the run destination iPhone. Make sure your targets all specify SDKs that are supported by this version of Xcode.
```

Is that different than what you're seeing?