The flight instructor reported that he was providing multi-engine instruction in an airplane with retractable landing gear to a private pilot that held a single engine airplane rating. During the pilot's first simulated engine failure, single engine approach to land, he did not extend the landing gear, and the flight instructor did not verify that the landing gear were extended. During the approach, the landing gear warning horn was heard by both pilots but disregarded because of the nature of the maneuver. The airplane touched down on the runway with the landing gear retracted. The airplane sustained substantial damage to the lower fuselage. According to the Airplane Flying Handbook, page 1-6 Use of Checklist: The importance of consistent use of checklists cannot be overstated in pilot training. A major objective in primary flight training is to establish habit patterns that will serve pilots well throughout their entire flying career. The flight instructor must promote a positive attitude toward the use of checklists, and the student pilot must realize its importance. The pilot reported that there were no mechanical malfunctions or failures with the airplane that would have precluded normal operation.