This is commonly available. More than one type.
User can script an entire SMS text conversation, as though he receives an incoming SMS at a particular time while sitting down with friends; he replies to it - and soon after there is another incoming SMS. As though the imaginary sender has replied to him.
I have seen people use this ruse - on me. As recently as mid-July 2013.
But I played along and pretended not to know.
Whatever it is, there must be a reason why they needed to fake it. So just leave it at that.
I can think of several reasons.
There are dead giveaways and mistakes that they make.
Playing along, gives you an insight into the personality of the trickster; and is a warning alarm to you whether that person can be trusted with anything important. Like for example, money.