Update: DeviceEmulator 2.0 Community Tech Preview
The ARM Device Emulator V 2.0 was released as a CTP a few weeks back. BarryBo gave an awesome talk about it at MEDC 2006. V2 is really cool. You can download it from: http://www.microsoft.com/downloads/details.aspx?FamilyId=13F5DE85-30CD-4506-9C5B-A2068FA1EE9E&displaylang=en.
V2 installs side-by-side with V1 and you can register it and use it as the default emulator with Visual Studio 2005. Please send us your feedback so that we can get an awesome V2 release.