Prototyping with real components is very time consuming. In order to save time, I have been looking for a digital circuit simulator, compatible with the MSP430, with no success. How do professionals deal with prototyping? If they prototype at all.
I don't think simulators are really that useful for digital simulations (for microcontrollers and their friends). Usually, there are hardware connection issues with the first designs. Therefore, it is common to use breadboards, development boards, or custom-built test boards to test the way external circuits are connected. Testing a smaller subsection of the whole circuit separately could help a lot by isolating the emerging different problems so that you only have to fight them one by one. After you have the input and the output connections cleaned up, you can turn to the software part. Complex software is easy because by carefully choosing your architecture, you can test many pieces of your software by compiling and running it on a PC. What is usually the hard part in software running on a microcontroller is the hardware-related programming. Using standard, vendor-provided libraries, and/or proven, tested code from older projects for this can improve your productivity a lot.
For analogue circuits, simulators can be good - if you understand how the circuit works, and which factors are important and which factors can be neglected. This is an important part of the lesson for beginners, because simulators for analogue circuit always have a simplified model of the real circuit. The results are valid and useful only as long as the model used by the simulator is the proper model for the kind of simulation used.
At the company I work for, prototypes are made with a PCB plotter (a LPKF protomat). It's a pretty expensive piece of hardware, at least for an individual, but it allows us to save a lot of time in the development process: a fully functional prototype almost identical to the future product can be achieved in a matter of hours, instead of days if we had to order the PCB from a PCB manufacturer.
The drawbacks are:
1-Only two layers, actually multi-layer prototyping is possible, but it requires more equipment, and the process is quite more complex.
2-The vias, although LPKF have a solder-paste based product to make them, after some experimentation, we figured out that soldering very fine wires in the via holes was the fastest and most reliable way.
Here is a link on a article we wrote about our prototyping process: http://www.yoctopuce.com/EN/article/birth-of-a-usb-module-part-1