So this is how apps are going to look on Windows Phone 7: visually captivating, great animations, 3D transformations. It's a very distinctive look and feel from iPhone apps, and may be just what Microsoft needs to establish themselves.
It's a good move to show the Associated Press clip in action: it shows how even something as potentially dry as news ends up being dynamic on Windows Phone 7. And it looks positively next-generation when compared to the iPhone's AP Mobile app:
Since this demo is primarily for developers, we also get a look at how ads will be incorporated. The answer seems to be "annoyingly". But that may just be the price of progress.