For more realistic results it is highly recommended to use a device for profiling an app with XCode Instruments. However, if you know what you are doing, it is also possible to profile your application with instruments by running in the iOS Simulator (which is much faster by the way).
To get that to work you first have to choose your Macintosh as the main target. After that go to "Choose Target > Choose Target".
Now navigate to the sandbox directory of your app within the simulator. On my machine the main directory for all simulator installations is Users/{MyUserName}/Library/Application Support/iPhoneSimulator. In that directory you will propably find multiple subdirectories containing the version number of the regarding iOS version. Choose the one you are currently using as a build target from Xamarin Studio.
Each application has a unique identifier, which defines its sandbox under ./Applications. To find the correct identifier just watch for a bundle with the name of your app.
Now select that bundle with a double click.
That's it. By clicking the record button the profiling starts as you know it.