Windows Phone 7 is only three days old, but leaked documents from Microsoft supposedly showing developer requirements have turned up thanks to XDA-Developers, suggesting WP7 will use both Silverlight and XNA—which makes sense, given the Xbox 360 integration.
In the "development tools" document, it states that "Microsoft Visual Studio 2010 and Microsoft Express Blend are the primary tools for developing applications for Windows phones."
The "partner application development policy" claims:
"partner applications will have access to an extended set of managed APIs and a limited set of native APIs. The extended managed APIs are meant to support extending the phone experience with functionality that is specific to a phone or network. This set of APIs supports functionality such as camera mode extensibility."
"If the managed APIs in the application platform are not sufficient to support critical partner needs, then partners can request access to native APIs (provided support is available in the operating system). If Microsoft approves the request to enable an application scenario, then the specific native APISs supported will be explicitly documented."