Driving simulation and training is one of the most typical applications of virtual reality (VR). This paper compares a VR based driving simulator to a desktop based one in terms of the level of user-felt presence and induced arousal. In particular, as the right level of arousal is important in learning and training, we focus on whether there is any difference in the level of arousal induced when different amounts of sensory feedback are given. An experiment was conducted in which subjects experienced two different driving simulators, VR-based (high amount of sensory stimulation) and desktop-based (low), under three different driving conditions (nominal/calm driving, driving on the curve, and driving through a collision accident). The level of presence was measured using a questionnaire, and arousal, indirectly through the galvanic skin response (GSR) and heart rate. Assuming that those physiological signals reflected the level of arousal of the user, our experimental results showed that while the level of presence was higher with the VR-based set up, no significant differences were found for arousal between the two system set ups. Arousal was dependent only on the task conditions. For one, this is contrary to several previous works [Meehan et al. 1998][Brogni et al. 2006] that had identified physiological signals (such as heart rate and GSR), as a reliable measure of presence. Even though VR simulators may not generate a differentiated amount of arousal, the training may still be effective for physical/spatial tasks (such as driving) due to other factors such as a large field of view and stereoscopy. However, for training of logical tasks, the cost to benefit ratio of VR based simulators may be too high.