Choosing iPhone SDK 3.2 for "Test & Package" always starts up my app in the iPad simulator… is it possible to start as iPhone?
3.2 is only for iPad. This is an Apple thing, not a Ti thing.
In short, as far as I know: no.
3.2 is the iPad for right now. Future versions may include the iPhone.
Also, if your project was started as "iPad", it will not seamlessly work on the iPhone, as the screen sizes differ and a number of other things are not available.