Quick introduction first: My name is Brian Mills and I've been employed in the commercial flight sim industry for 8+ years.
Recently I've been working on an S-Function that integrates JSBSim (the default flight dynamic model for FlightGear open source flight simulator) into Simulink. Anyone who has read the interview with Curtis Olsen about the utility of using FlightGear for HIL testing will probably be very interested in this. By bringing JSBSim into Matlab/Simulink, a UAV designer can develop and test the FDM model within Simulink, and once completed, can then develop control systems and sensor models using Simulink tools. This means an entire UAV vehicle and guidance control system could be developed and tested using an established flight simulation product running in Simulink.
If anyone is interested in testing this please PM me and I can email you the .rar. Its about 28MB. As an alternative, I hope to upload the project to Mathworks.com soon and get it on the JSBSim-Matlab sourceforge site
FYI, this is still "beta" and there is more work to be done. Also, since many people do not have access to Matlab, I hope that in the near future a version for the free ScicoLab can be released.