Think I solved this for my situation at least. I'm running WordPress Multisite and have WPMU domain mapping plugin enabled. I originally had the domain mapping configured to use "Original Domain" for "The domain used for the administration area should be" setting in WPMU Domain Mapping. This breaks simplemodal, and other ajax based login plugins like "Login with Ajax" as the domain reported by site_url() is not the domain setup in WPMU Domain Mapping. By changing "The domain used for the administration area should be" to "Domain entered by the user" or "mapped domain" simplemodal now works.
However, this is unfortunate because if say you wanted to use a shared SSL cert and force logins to your site.yourdomain.com, using this scenario you could not.
Eric Martin, if you're reading this, a great feature request would be to add a field to the admin section of simplemodal where an "alternate" login domain could be entered as an option for simplemodal to use instead of calling site_url() to populate the action of the #loginform. Since the "The domain used for the administration area should be" option in WPMU Domain Mapping is a global setting, it will break sites using the site.yourdomain.com for forced SSL logins if we change it to work with simplemodal.