psisim is a software suite that acts as a high-level simulation tool for the development and characterization of instrument performance in stellar and substellar observations. psisim is capable of modeling science yields, generating simulated spectra, and acting as an exposure time calculator. Its modular framework allows for implementation of various instruments, including imagers and spectrographs. Currently models exist for KPIC, MODHIS, GPI, HISPEC, PSI-Blue and PSI-Red. One of the larger functionalities of psisim is the simulation of exoplanet observations behind adaptive optics systetms. Utilizing instrument characteristics, such as Strehl ratio, throughput, etc., and pulling from models generated on the fly or from various common atmospheric grids, psisim is able to return simulated spectra and separate noise components from sky, photon, and thermal sources. We are then able to evaluate instrument performance and perform simulated science programs. We have recently upgraded psisim with a module for observations in polarized light. Manipulation of instrumental Mueller matrices mimics the effect optical components have on incoming light. Inversion of the instrumental Mueller matrices enables recovery of desired Stokes parameters, along with associated observational noise. Here we will provide an overview of psisim, highlighting key features and its adaptability for use with new instruments. We'll demonstrate how psisim simulates observation with an example, describe a few use cases where it has proved useful, and provide some preliminary results of spectro-polarimetric observations using the new polarimetry mode.