Yeah, I don't think a sophisticated cloth simulation is useful for game development.
I watched this guy a few times on twitch: http://stoutgames.com/:cheongsam
He developed a physics based cloth simulation for his lady character. It was months of work, and from both a (CPU) resource and time perspective not worth the effort for any other normal game.

I've recently remade my cape physics because that old one was a little antiquated with a few drawbacks. The basic principle stayed the same, except no ent_animate anymore, just vertex shader rotations and deformations, based on lite-C parameters.