I just mentioned that with Device Emulator V2 you can bind to your host network adapter on the fly (see my blog post about DE V2 at http://blogs.msdn.com/anandba/archive/2007/03/13/device-emulator-v2-is-live.aspx).

This can be done on the emulator's File-->Configure menu by selecting the Network tab.

Use Virtual PC 2007 for networking support: The best way to get Internet (TCP/IP ) connectivity on the emulator, without cradling it is to download Virtual PC 2007. This will install the Virtual Machine Network driver on your system (remember to run the install as administrator). Then, configure your emulator image with the correct proxy settings. You should ensure that the guest OS running inside your emulator gets an IP address, and that you are able to ping it.

--Anand