Read original post by Jason Bourne at Windows Phone 7 Developer Guide
At the time of this writing, the current version of the development tool for Windows Phone 7 is Visual Studio 2010. To make development simple for newcomers to the Windows Mobile platform, Microsoft has set up a package that will install everything you need to develop, compile, and run code in the emulator or on a physical Windows Phone device—for free. The download URL at this time is http://www.microsoft. com/express/Phone. [...]