I struggled with the same problem. Using version 5.0 of the iOS simulator and Xcode 4.2, localizations do not take effect when the Root.strings file is modified.
My installation has a Settings.bundle file that contains Root.plist and a directory for each supported language containing the Root.strings file:
Settings.bundle:
Root.plist
en.lproj:
Root.strings
fr.lproj:
Root.strings
This is almost the standard setting that Apple documentation offers.
When the simulator uses English localization, I change the corresponding Root.strings file and recompile, the changes do not take effect. But if I uninstall the application, clean up the project and re-execute, then the localization takes effect. This is similar to an Xcode or iOS Simulator bug.
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