We are in the process or rolling out a new macOS image which includes a ton of new updates and Xcode 8 beta.
It looks like if you try to start the simulator using something like this:
open -b com.apple.iphonesimulator
Even if you have Xcode 7.3.1 selected, Xcode8 beta will take over for some reason and boot iOS 10 instead of the version you probably want.
The best way to work around this is to specify the version of the simulator that you want to run as shown in this post: Xcode exit code 65