Observations of extrasolar planets using integral field spectroscopy (IFS), if coupled with an extreme adaptive optics system and analyzed with a simultaneous differential imaging technique (SDI), serve as a powerful tool for directly detecting and characterizing extrasolar planets; they enhance the signal of the planet and at the same time reduce the impact of stellar light and, consequently, important noise sources, such as speckles. In order to verify the efficiency of such a technique, we have developed a simulation code that is able to test the capabilities of this IFS-SDI technique for different kinds of planets and telescopes by modeling the atmospheric and instrumental noise sources. The first results obtained with the simulations show that many significant extrasolar planet detections are indeed possible using the present 8 m class telescopes within a few hours of exposure time. The procedure that is adopted to simulate IFS observations is presented here in detail, where we explain in particular how we obtain estimates of the speckle noise, adaptive optics corrections, specific instrumental features, and how we test the efficiency of the SDI technique in order to increase the signal-to-noise ratio of the planet detection. The most important results achieved from simulations of various objects, from 1MJ objects to 30MJ brown dwarfs, and for observations with an 8 m telescope, are then presented and discussed.