Large language models (LLMs) are increasingly applied in scientific research, offering new capabilities for knowledge discovery and reasoning. In single-cell biology, however, evaluation practices for both general and specialized LLMs remain inadequate: existing benchmarks are fragmented across tasks, adopt formats such as multiple-choice classification that diverge from real-world usage, and rely on metrics lacking interpretability and biological grounding. We present SC-ARENA, a natural language evaluation framework tailored to single-cell foundation models. SC-ARENA formalizes a virtual cell abstraction that unifies evaluation targets by representing both intrinsic attributes and gene-level interactions. Within this paradigm, we define five natural language tasks (cell type annotation, captioning, generation, perturbation prediction, and scientific QA) that probe core reasoning capabilities in cellular biology. To overcome the limitations of brittle string-matching metrics, we introduce knowledge-augmented evaluation, which incorporates external ontologies, marker databases, and scientific literature to support biologically faithful and interpretable judgments. Experiments and analysis across both general-purpose and domain-specialized LLMs demonstrate that (i) under the Virtual Cell unified evaluation paradigm, current models achieve uneven performance on biologically complex tasks, particularly those demanding mechanistic or causal understanding; and (ii) our knowledge-augmented evaluation framework ensures biological correctness, provides interpretable, evidence-grounded rationales, and achieves high discriminative capacity, overcoming the brittleness and opacity of conventional metrics. SC-Arena thus provides a unified and interpretable framework for assessing LLMs in single-cell biology, pointing toward the development of biology-aligned, generalizable foundation models.