Trainz from Auran Games of Australia is the best railroad simulator currently available for "home" computers. The current version, Trainz Simulator 2012 (TS2012), may be found in a store with some luck but your best bet is ordering it directly from Auran via their web site .

TS2012 comes with several layouts and a wide variety of locomotives and rail cars but perhaps the best thing is you can create your own layouts without being limited by the size of your garage or basement. The pictures below are from my own Elko and Lincoln RR. I used only buildings, track, trees, roads, automobiles and stuff that comes with the program but the amazing part is there is allot more stuff on the Trainz "download station" created by fellow Trainz nuts (trainzers) and ready for download. Once your master layout is completed you can upload it to the download station for others to use.

About my Elko and Lincoln TRS, done with TRS2004, is the Trainz version of a 5.5 foot by 10 foot N scale layout I once had in my garage. After a couple of years fooling with it I decided I wasn't very good at it and lost interest. I eventually tore it down. With Trainz I was not limited to 5.5 x 10 and built it the way it should be built with broad curves, longer straight aways and more sidings. Also I no longer had wiring problems, bad rail connectors or dust to contend with. Athern, Atlas, Bachman be scared. Be VERY scared.

With Trainz you are not limited to model railroad style layouts. Some have made layouts (routes) hundreds of miles long, recreating actual railroads.
A Niles Canyon Scene from my Niles & Hinton RR. This shot was taken from the shoulder of Niles Canyon Road between Western Pacific Tunnels one and two as WPs west bound California Zephyr transits the canyon enroute to Oakland. Across the canyon is a Sothern Pacific local freight headed for Pleasanton and Livermore.
From my Elko and Lincoln RR
From my Gorre & Daphetid Line

The Western Pacific SW7 skin I created.

This is a picture of Tony Hillman, from Auran, and myself demoing Trainz at the Great American Train Show (GATS) at the Cow Palace just south of San Francisco. Tony is on the right and I am the good looking guy (wearing the cap).
This one and below are more recent screen shots. Not only has Trainz gotten better but so has the best of us Trainzers.

A sceen from my latest route, under construction, of the WP/SP Stockton to Milpitas circa 1962. This is Tracy at the Holly Sugar junction.

Here are some shots of Trainz used to make "model railroads".