Windows Phone 7 will be a legitimate gaming platform. The company just unveiled XNA Game Studio 4.0, which, in addition to supporting PC and Xbox 360, will also let designers make games for the new mobile platform. Besides being great news for indies, it also means that you'll be able to use your gamertag and Avatar on the phone, as well as unlock Xbox Live Achievements.
You can read more about the technical integration of XNA and WP7 on Microsoft program manager Michael Klucher's blog. Hopefully we'll have even more details for you as the tech is rolled out during GDC.