I don't award individual XP or any XP at all for that matter. I simply tell my players that they level whenever I think it is appropriate. I find that this works very well for my group for several reasons:
1) It saves me a lot of time and annoyance having to calculate CRs, ELs and XP awards.
2) It encourages cooperative play in the group, rather than competition for more XP.
3) It encourages other activities than overcoming 'encounter challenges'. Yes, I could make a system where I award XP for these other activities to achieve the same goal, but through abandoning the XP system I don't have to bother with that at all.
4) It allows me to postpone or accelerate the advancement of characters depending on whether I feel the players have learned and internalized all of their currently available abilities without worrying about whether they have 'earned' their level advance in terms of the XP system. In fact, it allows me to control the pace of leveling in general, based on whatever factors I consider important.
5) The legacy XP system is essentially based on character advancement dependent on hitting things. This may logically work for the fighter, but for other classes, such as the wizard or the cleric, it is wholly inappropriate even if tied to the use of the abilities or spells of those classes. How the heck is a wizard supposed to learn a fireball by casting invisibility more often in combat? Sure, he is assumed to be studying and researching in between combats, but in that case combats being the determining factor in advancement don't make sense. Changing the XP system to one based on time spent in the library and the research laboratory would make more sense, but would probably not make for a very exciting game. As such, I find it more simulationist to just abandon the entire system and let myself decide when I feel the characters have learned enough and/or done enough to earn a level, but taking other circumstances into account (player learning of abilities, time that has passed, progression of the plot in the backround and so on).
6) My players love my system of advancement.
That said, I would never argue for the removal of the XP system from the official rules. It suits many groups and I can easily ignore it, so I see no advantage for me or anyone else in removing the system officially. Indeed, this is also my feeling about other subsystems that many may find complex - if they are ignorable and many others like them, there is no reason to remove them from the game.