One of the requirements for application submission to Marketplace is a representative screenshot of your app in action. Being old-fashioned, I usually just use the built-in Snipping Tool in conjunction with the emulator (don’t forget to set it to 100% before capture). Last weekend though, at the Windows Phone Workshop in Birmingham, Pete mentioned a tool that can help automate the process for you.
The “Windows Phone 7 Simulator Cropper” is written by Cory Smith and grabs & saves screenshots of your app running in the emulator – you can capture either with or without the emulator chrome.
If the screenshot is for use in Marketplace submission, use the Marketplace (no chrome) setting and remember to set the emulator zoom to 100%! You should end up with a 480x800 png file you can upload directly to Marketplace.
How do you get your phone inside of the emulator? I have the SDKs, VS 10 most every utility.