I just had this same problem. I loaded up a number of older XCode projects and they would compile and run fine with the simulator however as soon as you tried to run or debug on the device (which in my case in a iTouch v2) it would simply say it was running, then say the application exited. No errors, no logs.
Thanks to someone on the iOS Developer forums for putting me on the right track. At some point over the last couple of XCode releases (not counting the XCode releases for OSX Lion as I have access only to OSX Snow Leopard) Apple changed how projects were set up even older ones that were loaded.
The standard architecture used to include both arm6 and arm7 however, and at least with XCode 4.2 standard now only includes Arm 7 $(ARCHS_STANDARD_32_BIT) and apparently resets an old project's settings as well. Which went un-noticed to me as I used the simulator.
I tried changing the configuration string to "arm6 arm7" and this did not work. However the error that was returned contained the solution (at least for me an hopefully others still having this problem.)
In XCode 4.2 if you wish to build down to older hardware such as v1 and v2 devices simply change the project setting for Architectures to $(VALID_ARCHS) which defaults to the old standard of Arm6 and Arm7.
You may as mentioned previously be required to set the Build Active Architecture Only to "Yes" for the debug option (this however is not confirmed by me to be required).
I hope this helps anyone else still having this issue and I apologize for bumping this thread.