You can achieve cycle exact emulation in software as well as in hardware though your operating system can make it difficult. There are also various cables and devices that allow you to connect original peripherals (like say a Commodore 1541 disk drive) to your PC. I think the hardware solutions are nice for those that want to use "original" hardware to some degree (e.g. replacing original chips, motherboard, etc. with FPGA implementations) but I don't think it is necessary for near perfect emulation or data recovery (at least in the vast majority of cases).