This paper describes a methodology for the systematic exploitation of the emerging web 2.0 social media by government organizations in the processes of public policies formulation, aiming to enhance e-participation, in combination with established simulation modeling techniques and tools. It is based on the concept of 'Policy Gadget' (Padget), which is a micro web application combining a policy message with underlying group knowledge in social media (in the form of content and user activities) and interacting with citizens in popular web 2.0 locations in order to get and convey their input to policy makers. Such 'Padgets' are created by a central platform-toolset and then deployed in many different Web 2.0 media. Citizens input from them will be used in various simulation modeling techniques and tools (such as the 'Systems Dynamics'), which are going to simulate different policy options and estimate their outcomes and effectiveness. A use case scenario of the proposed methodology is presented, which outlines how it can be used in 'real life' public policy design problems.