I think you're a bit confused. CUDA isn't a physics engine, it's related to the architecture of the GPU (Well, GPGPU now). You're thinking of PhysX, which is nVidia's physics engine that has both software and a hardware-accelerated modes.
To turn PhysX's hardware-accelerated mode off, along with other CUDA-based applications, you need to go your nVidia control panel, select 'Manage 3D Settings' and the sixth option should be 'CUDA - GPUs' and deselect your GPU (Click 'All' and then the tick-box for your GPU). As for PhysX itself, it cannot be turned off. It's as much a part of the game as, say, the lighting. You can toggle between the software mode (i.e. CPU) or the hardware-accelerated mode (i.e. the GPU) if you select 'Set PhysX Configuration' in your nVidia control panel.
If you have ATi hardware, you can only use the software mode - Unless, of course, you have the Aegia PhysX card.
