The SoftKeyboard does work in the simulator with AIR 3.7, it depends on how you wish to activate it that is the problem.
If you need to activate the SoftKeyboard via a Input textfield then make sure that the textfield is of a "Input" type (myTF.type = TextFieldType.INPUT). When focusing on the textfield the softkeyboard will display on the iOS Simulator and iOS Devices. There is no need to do anything else such as softkeyboard options in code.
If you have your Rendering mode set to CPU the screen will adjust accordingly, however if you have it set to GPU the keyboard may obstruct the textfield so just take this into consideration.
You cannot activate the softkeyboard by code.
There is another way to do it which I'm unable to check right now, but on a certain version of iOS SDK you could actually select "Open Software Keyboard" from the Hardware menu on iOS Simulator menu, if you have it, it will be located below "Simulate Hardware Keyboard".
Hope that helps.